Energy leaders say Ottawa-Alberta pipeline deal offers hope, not certainty

CALGARY — With Ottawa and Alberta recently signing an energy deal to fast-track a new pipeline to the West Coast and agreeing on a carbon tax rate, some of Canada’s top energy executives remain cautiously optimistic.During a panel discussion at the third annual Energy Connections Canada conference in Calgary, oil and gas industry leaders said the recently announced energy agreement between Prime Minister Mark Carney and Alberta Premier Danielle Smith was a positive signal but still warned major economic and regulatory barriers remain in the way of a new crude oil pipeline being built.The agreement, which was signed in Calgary on May 15, included plans for Alberta to submit a formal proposal for the new one-million-barrel-per-day pipeline by July 1, 2026, as well as major revisions to the industrial carbon tax, which will be frozen at $95 per tonne through 2026 before gradually increasing to $130 per tonne by 2035.However, Mike Belenkie, president and CEO of Advantage Energy, questioned whether or not the timelines outlined in the new memorandum of understanding (MOU) were realistic.“[The question here] is whether Alberta will be able to move towards proposing this by July 1,” Belenkie said, adding that with carbon capture and storage (CCS) being proposed to be up and running by 2035, there was a “mismatch.”“I think most of the other considerations in this updated MOU announcement are good, but not material to this kind of project. So it's worth being very careful.".Mixed reactions after Ottawa and Alberta announce major energy agreement.He also warned the MOU doesn’t materially de-risk the enormous challenge of actually constructing a new export pipeline to the West Coast.“I think right now all these announcements we keep getting, they're still a fantasy, and they have to be turned into reality somehow,” he stated.“If we happen to get a proponent to come in and backstop this Alberta oil pipeline to tidewater, that's one thing. Getting it built is a whole other thing. The way I would frame it is it's possible, but not probable.”His comments come as Ottawa and Alberta work to position Canadian energy policy around diversification amid growing geopolitical uncertainty and concerns regarding Canada’s over-reliance on the United States as its main energy customer.Trevor Ebl, president of Canadian natural gas pipelines at TC Energy, said his company is closely watching the emissions and carbon tax side of the MOU following TC Energy’s spin-off of its oil pipeline business into South Bow in 2024.That agreement separated TC’s oil pipeline assets — including the Keystone pipeline system — into South Bow, while TC Energy retained its natural gas pipelines, storage, and power businesses.“We have a lot of natural gas pressure and compression facilities, so carbon price and what’s going to happen there is a big piece that we’re looking at,” Ebl said.He argued that many other countries remain more focused on energy affordability and reliability rather than climate policy alone..'SWEET SPOT': Alberta's energy minister says new carbon tax deal balances emissions and competitiveness.Ebl also pointed to LNG Canada positioning itself as one of the world’s lowest carbon-intensity liquefied natural gas (LNG) exporters, saying LNG exports could “displace 10% of Asia’s coal demand,” which is the equivalent of roughly half of all Canada’s emissions.“That's a real kind of global benefit and advantage,” Ebl said.He did, however, acknowledge customers generally are not paying extra for lower-emissions cargoes.“When we ask our customers at the end of the pipe, ‘Are you getting paid a premium for this LNG cargo if its emission intensity is lower?’ the answer we generally get is no,” he said.Canada’s carbon tax system also creates competitiveness challenges when attracting investment compared to jurisdictions like the United States and Mexico, according to Ebl.“My peer in the US doesn’t have to bake that into his economics, and same with my peer in Mexico,” he said.Jane Keast, president and CEO of Trans-Northern Pipelines, told the audience the new MOU did at least represent a more realistic approach than previous climate targets put forward by Ottawa.“When Trudeau set the target earlier about carbon capture and carbon intensity and taxes, it was unrealistic. It was unachievable,” Keast said.“So now we have reset the bar. We’re not actually taking it away. We’re just resetting it so now we can actually get down to some action.”

Energy leaders say Ottawa-Alberta pipeline deal offers hope, not certainty

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