A recent report from TD Economics suggests that the proposed new oil pipeline to the West Coast could positively impact Canada and Alberta’s gross domestic product, although the projected economic benefits may be lower than what government estimates indicate.
The analysis forecasts a potential 0.6% increase in the national economy by the 2040s and a 3.5% boost for Alberta. However, economists Marc Ercolao and Likeleli Seitlheko caution that these figures, while informative, are based on optimistic estimates put forth by project proponents and government entities.
Taking a more conservative approach, the economists propose that the actual impact could be closer to a 0.3% rise nationally and a two percent growth provincially. Nonetheless, they emphasize that even if the final outcomes fall short of official estimates, the pipeline project would still significantly contribute to economic growth, especially when considering enhanced market access and export diversification.
Alberta recently submitted its application for the pipeline project, which aims to deliver up to one million barrels per day to the federally designated major projects office. The proposed pipeline, managed by Crown-owned Trans Mountain Corp., carries an estimated cost ranging from $35 billion to $44 billion. Currently, the majority of the funding is expected to be provided by the federal and provincial governments, with Pembina Pipeline Corp. holding an initial 10% stake.
The pipeline route, predominantly following the existing Trans Mountain line to a southern port near Vancouver, is projected to increase Canada’s oil exports by 20% and substantially elevate shipments to Asia. This expansion aligns with Alberta’s strategy to bolster exports to the Pacific region.
Despite the potential benefits, the TD economists caution that Asian demand for Canadian oil may face challenges in the future due to factors like evolving energy trends, such as the rise of electric vehicles and a shift towards cleaner fuels. Additionally, competition from other oil sources, like Russian crude, could impact Canada’s market share in Asia.
The Alberta government anticipates that the pipeline will receive national importance designation in the upcoming fall, with construction potentially commencing by late 2027.
