CALGARY — A new report from Charles St. Arnaud warns that Ottawa and Alberta’s plan to transform Canada into an “energy superpower” may ultimately require tens of billions of dollars in taxpayer-backed financial support to get major oil and gas projects off the ground. St. Arnaud, chief economist at Servus Credit Union, argues the proposed strategy — built around new pipelines, increased oil sands production, and carbon capture projects — faces enormous financial and political hurdles despite promises of economic growth and energy expansion. According to the report, the memorandum of understanding (MOU) signed between Ottawa and Alberta in late 2025 depends on three interconnected pillars: a new west coast pipeline, expanded oil production to fill that pipeline, and massive carbon capture infrastructure intended to help Canada meet its net-zero targets by 2050. .But St. Arnaud says all three projects must move forward simultaneously or the entire framework risks collapse.“A quick estimate would put the cost of the pipeline to the West Coast at about $35 billion,” the report states, adding that a new oil sands mine could require another $30 billion while the proposed Pathways Alliance carbon capture project may cost roughly $25 billion. Combined, the total upfront investment before a single barrel of oil is produced could exceed $90 billion. The report argues the oil sector has fundamentally changed since the mid-2010s oil crash.While oil revenues are now roughly 50% higher than before the 2014 collapse and profitability remains strong, companies are no longer aggressively reinvesting into expansion projects..Instead, producers are increasingly behaving like “utility companies” focused on efficiency, dividends, and shareholder returns rather than growth. St. Arnaud estimates producers are now returning roughly 12% of revenues to shareholders through dividends and buybacks, compared to only 2.5% in 2014.Meanwhile, only about 12% of revenues are being reinvested back into operations, down sharply from nearly 30% a decade ago. The report also notes approximately 75% of shareholders in Canadian oil companies are now foreign investors, meaning much of the industry’s profits are flowing outside the country rather than being reinvested domestically. St. Arnaud says this shift may have created a more risk-averse shareholder base unwilling to sacrifice dividend income for massive long-term projects carrying political and regulatory uncertainty.“Ultimately, shareholders decide whether capital will be deployed for new projects, not the company’s executives,” the report states. The report argues governments will likely need to financially “de-risk” the projects to convince companies and shareholders to proceed..That support could range from existing carbon capture tax credits worth roughly $19 billion to potentially as much as $60 billion if governments are forced to absorb the full cost of decarbonization infrastructure and pipeline construction. The report also questions whether taxpayers will support massive subsidies for one of Canada’s most profitable industries while affordability concerns continue to dominate household finances and other sectors struggle under American tariffs. St. Arnaud acknowledges the economic upside could be substantial.The report points to the expansion of the Trans Mountain Corporation pipeline, which it says generated roughly $30 billion in additional oil industry revenues by narrowing the discount on Canadian crude exports. However, the report cautions that previous oil booms failed to create broad-based economic prosperity across the country and often masked deeper structural weaknesses in Canada’s economy.“The industry may not be the economic saviour some of its proponents are suggesting,” St. Arnaud concludes, warning the long-term benefits will ultimately depend on how future oil revenues are spent.
