West Coast Pipeline Predicted to Boost Canadian Economy

A new oil pipeline to the West Coast could boost Canada and Alberta's GDP, but perhaps not as much as governments are forecasting. A report from TD Economics predicts a 0.6% increase to the national economy by the 2040s and 3.5% to Alberta's, but using more conservative assumptions, the economists say the actual impact could be lower.

The government analysis estimates that the pipeline would bring in an extra 20% of Canada's oil exports across the Pacific, largely following the route of the existing Trans Mountain line. However, TD Economics warns that Asia's willingness to absorb Canadian barrels reflects a longer-run diversification strategy aimed at securing stable supply from non-Middle Eastern sources, but a bit of caution is warranted.

Asia's oil use is expected to flatten over time as Chinese demand approaches a peak over the next decade due to rapid electric vehicle adoption and a gradual shift toward cleaner energy. The Alberta government has said it expects the pipeline to be designated a project of national importance in the fall, with construction potentially beginning as soon as late 2027.

The estimated cost of the pipeline could range from $35 billion to $44 billion, with 90% of that shouldered by federal and provincial governments. Pembina Pipeline Corp. holds an initial 10% stake, but this is expected to increase as construction progresses.