A recent report from TD Economics suggests that a proposed new oil pipeline to the West Coast could provide a positive economic impact for Canada and Alberta, although the projected benefits may be lower than what the government estimates. The analysis indicates a potential 0.6% increase in the national GDP by the 2040s and a 3.5% boost for Alberta.
Economists Marc Ercolao and Likeleli Seitlheko caution that these figures are preliminary estimates by project proponents and governments, which may lean towards optimism. Taking a more conservative approach, they suggest that the actual impact could be around 0.3% nationally and 2% provincially.
Despite the potential for lower-than-expected gains, the economists emphasize that the pipeline project could still make a significant contribution to overall growth, especially when considering improved market access and export diversification.
Alberta recently submitted its application for the pipeline project, which aims to transport up to one million barrels per day to the West Coast. The development and operation of the pipeline would be overseen by Crown-owned Trans Mountain Corp, with an estimated cost ranging between $35 billion and $44 billion. Currently, the federal and provincial governments are expected to cover 90% of the costs, while Pembina Pipeline Corp. holds a 10% stake.
The proposed pipeline route, largely following the existing Trans Mountain line to a port near Vancouver, is projected to increase Canada’s oil exports by 20% and significantly expand shipments to Asia. This expansion aligns with Alberta’s strategy to diversify export markets and secure a stable oil supply from non-Middle Eastern sources.
While there is optimism about Asian markets absorbing Canadian oil, the TD economists caution that factors such as China’s evolving energy landscape and competition from other oil producers could influence the long-term demand for Canadian oil.
The Alberta government anticipates that the pipeline will be deemed a project of national significance in the upcoming months, with construction potentially commencing by late 2027.