Western Canada hopeful of new oil, gas pipelines after election results

Western Canada's oil and natural gas industry remains cautiously optimistic of federal government support to build new infrastructure and reduce its dependence on the US, with the Liberal Party being reelected with a fractured mandate, stakeholders said April 29.

"Its time to build Canada into a superpower in both conventional and unconventional energy resources," Liberal Party leader and Prime Minister Mark Carney said late April 28 following the conclusion of elections to elect members of the House of Commons for Canada's 45th parliament.

The Liberals won 168 seats – four short of a 172-seat majority in parliament – followed by the Conservative Party of Canada at 144 seats, the Bloc Quebecois at 23, the New Democratic Party at seven and the Green Party at 1, according to Elections Canada release.

The Liberal Party – previously under the premiership of Justin Trudeau – has been in power since 2015 with a legacy of adopting measures that in th delay or sometime cancelling of planned export pipelines from the nation's leading oil producing province of Alberta to markets in Europe and Asia.

The two major initiatives were the 1.1 million b/d Energy East pipeline from Alberta in the West to New Brunswick in the Atlantic Canadian Coast and the 525,000 b/d Northern Gateway also from Alberta to the Canadian Pacific Coast.

In the run-up to elections, Carney had spoken of supporting the construction of new oil and gas pipelines within Canada and to the coasts to open up new markets.

Alberta premier wants to see 'action'

"As Premier, I invite the Prime Minister to immediately commence working with our government to reset the relationship between Ottawa and Alberta with meaningful action rather than hollow rhetoric," Alberta Premier Danielle Smith said in a statement. "A large majority of Albertans are deeply frustrated that the same government that overtly attacked our provincial economy almost unabated for the past 10 years has been returned to government. As Premier, I will not permit the status quo to continue."

The selection of a new prime minister comes at a time when Canada and the US are embroiled in a trade tensions that includes a 25% tariff being imposed major goods exported to the US, including a 10% tariff on oil and gas.

Alberta exports over 4 million b/d of crude and 5 Bcf/d of natural gas to the US, according to Energy Alberta. However, one way of dealing with the planned tariffs is to open up new markets.

"The debate is no longer whether to develop our natural resources, but how swiftly and boldly we can advance," Mark Scholz, president of the Canadian Association of Energy Contractors, said in a statement. he said the energy industry's top priorities include expanding energy infrastructure, eliminating emissions cap, scrapping greenwashing legislation and fast-tracking LNG projects in coastal British Columbia.

"The real industry demand is access to new markets and this new mandate gives that opportunity," Greg Stringham, former vice president of markets for the Canadian Association of Petroleum Producers, told Platts, which is part of S&P Global Commodity Insights. "However, there will still be provincial opposition [like Quebec which is opposed to any oil pipelines through its territory] and without a strong federal push any such initiative will be stymied."

The Liberal party will have to depend on either the Bloc Quebecois or NDP, both of whom are opposed to oil pipelines for environmental reasons.

Regulatory reform

One area of likely improvement would likely be the regulatory process that has become too extended, Stringham said, noting the expectation will be for the new federal government to push for an accelerated timeline.

Bill C-69, which the Trudeau government introduced in parliament in 2018 – aimed at giving overriding powers to Ottawa to rule over the provinces and territories in granting environmental approvals for energy projects – will likely remain with certain modifications, Stringham said.

"[Prime Minister] Carney has given the indication he is going to improve it by approving one project each year, but change the clause of political override," he said.

The verdict will be awaited on new crude oil pipelines. But chances of building a new West-East natural gas pipeline is an option that could take shape to meet the growing demand in Eastern Canada, CEO of leading gas producer Tourmaline Oil, Michael Rose, told Platts.

"Expanding egress and accessing more international markets is needed along with improving the regulatory process," Rose said. "We don't need money from the government, but an expedited approval process in six months. We can deliver after that and private capital will come and pay for those projects."

The election of a new government comes with Canada preparing to enter the global LNG market with its first export cargo due to set sail in the summer from the first phase of Shell-led 14 million mt/year LNG Canada project.

"It is also pretty likely Phase 2 of LNG Canada will happen soon," Rose said, noting producers in Western Canada will step up drilling activities while fabrication shops in Eastern Canada could supply the steel for putting equipment in the ground.