Carbon-capture facility required for federal endorsement of pipeline
OTTAWA — The Canadian federal government and Alberta agreed Thursday to back construction of a new crude pipeline to the Pacific coast, aiming to carry about 1 million barrels of oil daily through southwestern British Columbia, officials said. The announcement came from Prime Minister Mark Carney and Alberta Premier Danielle Smith at a joint press conference in Calgary.
Carney said Ottawa, Alberta, and Canada’s largest oil producers have agreed to terms to begin construction of a carbon-capture and storage facility, which the prime minister described as required for the federal government’s endorsement of the new energy corridor. “This is not an expenditure. It’s an investment for the benefit of all Canadians,” Carney said.
The proposed pipeline would largely follow the route of the existing Trans Mountain corridor, a 710-mile line that already carries nearly 900,000 barrels a day. Canada took ownership of Trans Mountain in 2018 after Kinder Morgan abandoned the project, citing regulatory risk. The new pipeline would give Canada ownership of a second crude export corridor to the Pacific.
Under the agreement, Canada and Alberta will hold equal equity partnerships in the project. Calgary-based Pembina Pipeline will hold a 10% interest and contribute expertise to the corridor’s construction, officials said. A sizable equity stake has been reserved for local indigenous groups.
Alberta Premier Danielle Smith said she had previously planned to file a pipeline proposal on or around July 1. One of her concessions, she said, was agreeing to a route through southwestern British Columbia rather than through the northern Pacific coast, as she had previously proposed. “This is not another energy project, it’s a nation-building project,” Smith said. She described Thursday’s announcement as a high-level agreement, with more details subject to negotiation.
Smith first announced her intention to champion a new pipeline in October 2025, arguing that Alberta needed to take the lead because of a lack of private-sector interest. She said companies were reluctant due to regulatory risk from policies enacted under Carney’s predecessor, former Prime Minister Justin Trudeau.
Earlier Thursday, Carney struck a separate deal with British Columbia. Ottawa pledged billions in projects and reaffirmed its ban on oil-tanker traffic off the north coast. In return, British Columbia agreed not to impede efforts to build the new pipeline and to collect annual royalty payments from the pipeline owner. Opposition in British Columbia had posed a significant hurdle, according to officials.
Heather Exner-Pirot, a senior fellow and director of energy policy at the Macdonald-Laurier Institute, an Ottawa-based think tank, said: “Carney found a way to thread the needle and get widespread consensus on a west-coast pipeline. It’s like Christmas in July.”
Smith has said the pipeline is a litmus test for Canada’s ability to collaborate on economic initiatives that improve western Canada’s prospects and help the country diversify exports to non-U.S. markets. Alberta is scheduled to hold a referendum this fall on its future within Canada, driven by a segment of the population pushing for independence over decades of frustration with federal environmental policies.
This week, Carney said his Liberal government needed to shift course from the environmental policies of the past decade. He said Canada should capitalize on its oil and gas reserves given increasing demand from countries wary of relying solely on the Middle East following the recent U.S.-Iran conflict.
The pipeline proposal is now subject to a federal review to determine whether it qualifies as a nation-building project, which would allow an accelerated approval process. Consultations with local indigenous communities will begin immediately, officials said.