Alberta Oilsands Producers Hesitate Over Regulatory Risks and Pipeline Delays

Over three months have passed since Mark Carney and Danielle Smith announced the West Coast Oil Pipeline (WCOP) and its carbon capture companion project, Pathways. However, no progress has been made in securing commitments from Alberta’s oilsands producers to transport substantial volumes through WCOP or in determining who will cover the long-term costs of Pathways.

The delay is not unexpected. Alberta’s oilsands producers face three major risks that Carney has not adequately addressed. These risks include open-ended carbon taxes, the imposition of decarbonization on new production, and a regulatory system that allows for protracted judicial reviews based on Section 35 of the Constitution Act, 1982. These factors make it difficult for producers to invest in new oil production or pipeline infrastructure.

Critics argue that Carney’s claims about Canada becoming an energy superpower lack credibility as long as these risks persist. They suggest that Carney may be constrained by political consensus within his coalition but that the economic losses for Alberta due to missed opportunities will be significant. Additionally, Carney’s recent focus on a trade impasse with the Trump administration has further delayed addressing these issues.

Dennis McConaghy, a former executive vice-president at TC Energy, argues that Carney should immediately table legislation setting objective standards for Section 35 compliance. This approach, if sanctioned by the Supreme Court, would provide reasonable compensation for access and reduce risk for project proponents.