Albertans applaud pipeline win, but wonder if producers can meet the rising demand

The federal government has deemed the proposed pipeline to the West Coast as a project in the national interest, and Alberta experts largely see it as a victory for the oil industry — as well as the cause of federalism, which has come under fire through the ongoing separation referendum.

Still, they warn that many questions must be answered before the pipeline gets built, including whether Canadian oil producers are up to the task of filling it. 

“For too long, we’ve watched projects with enormous transformative potential get mired down in uncertainty and delay, and today, we’re turning the page,” said Alberta Premier Danielle Smith in a triumphant address from Fort McMurray Thursday morning. 

Leaders on both sides of Alberta’s legislature celebrated the announcement, with the opposition NDP also applauding the pipeline’s advancement in a Thursday statement.

“This is about as good as it can get,” said former CEO of the Alberta Petroleum Marketing Commission Richard Masson. 

“It looks like this project is gaining momentum. That feels quite different than what we’ve experienced over the past decade.” 

Masson says the provincial and federal governments are taking on more risk to signal certainty to investors after several high profile pipeline project failures left developers unlikely to pursue another project to the Pacific, even with the federal government having bought and completed the Trans Mountain pipeline expansion. 

“The political decision has been made up front: this is in the national interest. That typically doesn’t happen,” he said.

The proposed pipeline is 90 per cent owned by Alberta and Ottawa in equal shares, with Pembina Pipeline Corp. taking up the remaining 10 per cent. Despite the project’s government backing, no other private proponent has materialized to date to take on a larger share.

Experts say the pipeline would be a welcome investment to help diversify Canadian energy exports, even if no further private proponents emerge. But the other piece of the puzzle is production: what will fill the pipe? 

Pacific Link is designed to carry one million barrels per day, but other pipelines and expansions are scheduled to add an additional two million barrels, creating a structural overcapacity for oil. 

“For oilsands players, their choice is about growth or no growth,” said RJ Johnston, director of energy and natural resources at the University of Calgary in an interview with Canada’s National Observer.

Johnston says he expects producers to choose growth, but the questions remain as to how much. He says producers will be waiting to see if this momentum continues, and will be gauging demand in the international market.

“Do we see enough of a tight global oil market and enough regulatory momentum in Canada to get us to that level? I would say not yet. But we’re moving in that direction.” 

Prime Minister Mark Carney demurred when asked about the appetite for new greenfield development among Alberta’s producers.

“These are commercial decisions that the companies will make,” he said.

Manpower, referendum pose additional obstacles for Pacific Link

Another key concern is labour. Deborah Yedlin, the CEO of the Calgary Chamber of Commerce, says Thursday’s announcement is good news for the province and the country. But she sees workforce availability as a possible stumbling block. 

“I dusted off a speech that Charlie Fisher gave in 2005, when we were looking to triple oil production to three million barrels a day, and he was worried about labour then. Twenty years later, we’re still talking about labour,” she said in an interview with Canada’s National Observer. 

Lance Mortlock, a managing partner at global consulting firm EY, agrees it’s a major factor in the pipeline’s outlook.

“We’re simultaneously pursuing LNG, critical minerals, transmission, nuclear, data centres, oil and gas — so the competition for talent will be intense,” he said to Canada’s National Observer. 

Yedlin says the answer lies in immigration.

“We have to look seriously at how we bring people here to help us build this infrastructure,” she said. 

Immigration is one of the key issues at stake in the Oct. 19 referendum. Smith has consistently expressed an interest in limiting both immigration to the province and the key services offered to non-permanent residents. She put five immigration-related questions on the ballot.

With just over two weeks remaining until Albertans go to the polls, business leaders see Thursday’s announcement as a positive signal about the state of national unity.

“The governments wouldn’t be willing to put up tons and tons of money in their political capital if they didn’t think that they were going to be successful in the referendum,” said Masson.

Yedlin thinks it may also work to sway voters toward the “remain” camp.

“One of the grievances that’s been cited by individuals who want to push for a separation from the country has been that we haven’t been able to develop our resources,” she said. “Well, that chapter’s done. It’s closed. We’re moving on.”