Alberta is making strides in pushing for approval of a new oil pipeline by proposing heavy public investment from both federal and provincial entities to facilitate the transport of heavy crude oil, with the aim of reaping substantial economic rewards. Economists and industry experts view this substantial investment, estimated at over $35 billion, as a potentially beneficial and essential step.
The proposed pipeline, despite being categorized as a public-private partnership, will initially be primarily controlled by the federal government, holding a 90% stake through the Trans Mountain Corporation, and the Alberta government, via the Alberta Petroleum Marketing Commission. Only 10% ownership will be in the hands of Pembina Pipeline Corporation based in Calgary.
University of Calgary economist Kent Fellows emphasizes that the broader societal advantages are a significant attraction for governments, as pipelines alone may not offer high profitability. He notes that pipelines operate within regulated revenue constraints in Canada.
The potential benefits of the project, as outlined by economists and analysts, encompass job creation during construction, resource extraction, and ongoing oil or gas distribution. Beyond the direct pipeline-related employment opportunities, communities near the pipeline route could also benefit from increased economic activity.
Moreover, the project holds the promise of enhancing energy revenues for Canada by providing alternative markets and potentially securing better prices for Canadian energy products. The strategic significance of expanding shipping capacity to the Pacific Ocean has been acknowledged by federal politicians.
The public sector’s involvement in major infrastructure investments is not uncommon in Canada’s history, with significant projects such as railways and port infrastructure receiving government support. While some experts advocate for private sector involvement, the high costs and risks associated with such projects often necessitate government backing to move forward.
Looking ahead, the potential for increased private investment in the project post-operation has been highlighted by Pembina Pipeline Corporation. Both federal and provincial governments envision future private sector contributions to the pipeline’s development as it progresses.
However, challenges such as stringent regulations, environmental considerations, and the need for carbon capture initiatives present hurdles for the project. The requirement for a carbon capture project, like Pathways, as a condition for pipeline construction adds complexity and cost considerations for private sector participants.
Despite the ongoing negotiations and uncertainties surrounding the project, industry observers believe its successful completion could reshape Canada’s image as an investment destination and demonstrate the country’s ability to execute large-scale projects efficiently and attract international interest in its energy sector.