Ottawa, Alberta sign deal to advance oil pipeline project

Key Takeaways:

• The agreement suspends federal oil and gas emissions policies in Alberta, advances an Indigenous co-owned pipeline to Asian markets, and supports expanded AI computing capacity.
• Canada and Alberta commit to partnering with industry on what is described as the world’s largest CCUS project, aiming to make Alberta bitumen among the lowest-emission heavy oil.
• Both governments plan to reduce regulatory uncertainty and develop new carbon pricing and methane reduction frameworks by 2026 while targeting major increases in Alberta oil production by 2035.

The Whole Story:

The governments of Canada and Alberta have signed an energy agreement that suspends the federal oil and gas emissions cap, declares an Indigenous co-owned bitumen pipeline to Asian markets a project of national interest, and commits both parties to support a major carbon capture project.

The accord, signed by Prime Minister Carney and Premier Danielle Smith, aims to increase Alberta oil production to six million barrels per day by 2030 and eight million barrels per day by 2035, according to the release.

Key elements include federal commitment not to implement the oil and gas emissions cap; immediate suspension of the federal Clean Electricity Regulations in Alberta; and agreement to work toward construction of thousands of megawatts of AI computing capacity, with a large portion dedicated to sovereign computing for Canada and its allies.

The agreement also commits both governments to partner with Pathways Alliance companies to finance and construct what the release describes as the world’s largest carbon capture utilization and storage (CCUS) project, intended to make Alberta bitumen among the lowest emission intensity heavy oil globally.

“This is Alberta’s moment of opportunity to take the first steps toward being a global energy superpower and show the nation that resource development and sustainability can coexist,” Smith said in the release.

The pipeline component would be Indigenous co-owned and transport more than one million barrels per day through a strategic deep-water port to Asian markets. The agreement states this would be in addition to the Trans Mountain pipeline expansion, which is expected to add 300,000 to 400,000 barrels per day for Asian markets.

George Arcand Jr., Chief of Alexander First Nation, said in the release: “This pipeline is an excellent opportunity to demonstrate partnership and progress. My hope is that it will create lasting economic benefits for First Nations and strengthen the relationships that matter most — government-to-government and community-to-community.”

Both governments committed to consult with Indigenous partners and British Columbia to ensure they benefit economically from the pipeline. The agreement also includes plans to reduce regulatory uncertainty through legislative and policy changes.

By April 1, 2026, Alberta and federal governments will design a globally competitive, long-term carbon pricing framework for large Alberta emitters in oil, gas and electricity sectors through Alberta’s TIER system. A methane equivalency agreement is also due by that date, with a 2035 target for 75 per cent reduction relative to 2014 levels.

Kendall Dilling, president of Pathways Alliance, said: “We look forward to working on the details with both the federal and Alberta governments in the coming months with our shared goal of Canada being an energy superpower.”

Not everyone was impressed with the deal. When approached by reporters outside the B.C. legistlature Premier David Eby said called the deal an unnecessary “distraction” from major projects that are already underway in the province.

Eby added that the “fictional, non-existent, unfunded project” has become an “energy vampire” that could undermine other B.C. projects that are closer to being actualized.

“It cannot draw limited federal resources, limited Indigenous governance resources, limited provincial resources from the real projects that will employ people, provide the country with money that we desperately need, and provide investment access to global markets to deepen our trade relationships overseas,” Eby said.

Eby called urged the federal government to consult with Coastal First Nations who have being vocally against another pipeline and in favour of the oil tanker ban.

“There is no First Nations support for it,” Eby said. “I look forward to the prime minister making good on his commitment to Coastal First Nations, in particular, that they will be at the table.”