Alberta's Investment Crisis: A Pipeline Proposal Falls Short

The Alberta government has proposed a new pipeline project to transport oil from the province to the southern coast of British Columbia, but investment remains a major concern for the energy sector.

The Trans Mountain Corporation and the Alberta Petroleum Marketing Commission would develop and operate the pipeline, while Pembina Pipeline would hold a 10% stake during the construction phase. The estimated cost of the project is between $35 billion and $44 billion, to be paid for primarily by taxpayers.

According to Charles St-Arnaud, chief economist at Servus Credit Union, industry shareholders currently lack the 'appetite to commit that type of capital.' This is not an isolated issue; investment in oil and gas extraction in Alberta has declined significantly since 2014, from $64.6 billion to $25.3 billion.

A recent survey of senior oil and gas executives found that investors are wary of environmental regulations in Alberta, with 50% of respondents citing 'stability, consistency and timeliness of environmental regulatory processes' as a deterrent compared to only 14% in Wyoming and 11% in Texas. Additionally, 43% of respondents said the cost of regulatory compliance deters investment in Alberta.

The root cause of this problem is Canada's complicated and uncompetitive policy framework, which creates persistent delays, rising project costs, increasing carbon taxes, costly methane emissions reduction requirements, and continued regulatory uncertainty.