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Replacement pipe is stored near crude oil storage tanks at Kinder Morgan’s Trans Mountain pipeline terminal in Kamloops, B.C.CHRIS HELGREN/Reuters

Ottawa's approval of Kinder Morgan Inc.'s Trans Mountain expansion gives Canada's oil industry a chance to do what it has long hoped for – sell crude to customers beyond the United States.

Although there is still much uncertainty about whether opposition to the project will delay the twinning of the Trans Mountain line, industry analysts insist this type of new pipeline capacity to an ocean coast is critical.

"At the current point in time, we as Canadians will take any pipeline that gets through," said Michael Tran, director of global energy strategy for Royal Bank of Canada.

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"But it's the most imperative that we get pipelines pointing west – to get access to the Pacific. Those are the most important because those are the pipelines that will ultimately bring Canadian crudes, namely heavy Canadian barrels, to China and India."

Today, Canada's energy market is virtually all weighted toward the United States. Less than 1 per cent of Canadian exports of crude in 2015 went to non-U.S. destinations, according to the National Energy Board. Mr. Tran has noted more than half of the country's oil exports go to just eight U.S. refineries. Having the option of getting to India and China is important because those are the key demand-growth areas of the future, he said.

While Canada once looked to the U.S. as a never-ending source of crude sales, the North American energy landscape has undergone a radical shift in recent years. Today, as Canadian energy producers struggle with low global commodity prices, they are also competing against a technological revolution in U.S. shale oil and natural gas that could allow production there to grow for years, or decades, to come.

On the other side, environmentalists argue that Canada's energy sector now has sufficient pipeline capacity to get its existing production to the U.S. markets – where heavy crude from Alberta will probably fetch the best price it can muster.

Adam Scott of Oil Change International said oil shippers already have adequate access to a number of separate buyers in the United States. Asian markets are far from certain, and much of the oil shipped through the current capacity of the Trans Mountain line ends up being tankered to the United States – not Asia. "Building pipelines and expanding the industry to fill them will completely undermine Canada's climate obligations," Mr. Scott said.

Arc Financial Corp.'s Peter Tertzakian said rising oil production in the U.S. – along with the election of Donald Trump as the next U.S. president – are important reminders that Canada's energy industry is overly vulnerable to U.S. factors completely outside of its control.

"It should be a wake-up call for everybody," said Mr. Tertzakian, the chief energy economist and managing director of the Calgary-based private equity firm.

"If we only have one supply chain to that customer, then we have limited options to compete globally."

Mr. Trump has said he is in favour of TransCanada Corp.'s Keystone XL pipeline, a project that would bring massive volumes of Alberta crude to key U.S. markets – and that was believed defunct under a Democratic administration. Even with the prospect that the Keystone XL pipeline could be revived, Canadian political and industry leaders have continued to beat the drum for at least one new project to a coast – in large part to keep the energy industry's options open.

There are a lot of unknowns about what policies Mr. Trump will pursue, said Mr. Tertzakian, but one thing seems certain – that he will encourage further U.S. exploration and production, which means greater competition for Canadian producers. He added the case for Keystone XL has weakened because of incremental increases to current pipeline lines to the U.S. in recent years, and compelling investment alternatives in Texas.

This month, the U.S. Geological Survey announced that that the Wolfcamp shale in the Permian basin of Texas contains an estimated 20 billion barrels of oil. The potential of billions of more barrels of light, lower-carbon oil in the Wolfcamp field – the largest source of shale oil that the U.S. scientific agency has ever assessed – will be another major challenge to higher-cost Canadian oil sands producers, Mr. Tertzakian said.

Environmental, indigenous and economic issues have all been considered in recent calculations about pipeline projects, he said. "Now we are hopefully realizing that an equally big – if not the biggest issue – is the issue of sovereignty over our own resources and supply chain."

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