A recent report from TD Economics suggests that a new oil pipeline to the West Coast could have a positive impact on Canada and Alberta’s economies, although the projected benefits may be lower than what the governments anticipate. The analysis forecasts 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 figures, while informative, are based on optimistic estimates provided by project proponents and governments with vested interests in development. Taking a more conservative approach, the economists suggest that the actual impact could be closer to a 0.3% rise at the national level and a two percent increase for Alberta.
Despite the possibility of outcomes falling short of official projections, Ercolao and Seitlheko emphasize that the pipeline project would still make a significant contribution to economic growth, especially when considering enhanced market access and export diversification.
Alberta recently submitted its application for the pipeline, which is expected to transport up to a million barrels per day, to the federal major projects office. The project, to be managed by Crown-owned Trans Mountain Corp, is estimated to cost between $35 billion and $44 billion, with majority funding coming from federal and provincial sources, and an initial 10% stake held by Pembina Pipeline Corp.
The proposed pipeline route, largely following the existing Trans Mountain line to a port south of Vancouver, could increase Canada’s oil exports by 20% and substantially raise shipments to Asia. This expansion aligns with Alberta’s strategy of tapping into Asian markets for oil sales.
While the move to boost exports to Asia is seen as a positive step, TD economists caution that challenges may arise, such as competition from other oil sources and potential shifts in energy consumption patterns in Asian markets.
The Alberta government anticipates that the pipeline will be recognized as a project of national significance in the near future, with construction potentially commencing by late 2027.
