A recent report from TD Economics suggests that a proposed new oil pipeline to the West Coast could have a positive impact on Canada and Alberta’s economies, although the projected benefits may not be as high as anticipated by government officials. The analysis indicates a potential 0.6% increase in the national GDP by the 2040s and a 3.5% boost for Alberta.
Economists Marc Ercolao and Likeleli Seitlheko caution that these estimates, provided by project proponents and government bodies, may be overly optimistic. By using more conservative assumptions, they suggest that the actual impact could be closer to a 0.3% rise nationally and a two percent growth for Alberta.
Regardless of the exact figures, the economists believe that the pipeline project would still make a significant contribution to economic growth, especially when combined with enhanced market access and export diversification efforts.
Recently, Alberta submitted its application for the construction of the pipeline to the federal major projects office. The project, which is expected to be managed by Trans Mountain Corp, could cost between $35 billion and $44 billion. Currently, the majority of the funding is set to be provided by the federal and provincial governments, with Pembina Pipeline Corp holding a 10% stake.
The proposed pipeline, which would run to a port south of Vancouver following the existing Trans Mountain line, is projected to increase Canada’s oil exports by 20% and substantially boost shipments to Asia. This expansion aligns with Alberta’s strategy to access new markets and reduce reliance on Middle Eastern oil sources.
While Asia’s demand for Canadian oil is seen as a promising opportunity, the TD economists caution that factors such as the rise of electric vehicles and competition from other oil producers could impact long-term prospects for Canadian exports.
The Alberta government anticipates that the pipeline will be designated as a project of national significance later this year, with construction potentially commencing by late 2027.
