ANALYSIS: Blue wave in Washington gives Canada fresh reason to expand energy exports

CALGARY — A blue tsunami rolled through Washington on Tuesday night, derailing the Trump train and, with it, Republican control over both the US House of Representatives and the Senate.For US President Donald Trump, the result was considerably less flattering than what he might have expected, especially after last-minute appeals to voters such as announcing he and Israeli Prime Minister Benjamin Netanyahu had agreed to end America’s deal to send Israel $4 billion a year in foreign aid, as well as reviving his pledge to dish out $5,000 a piece to voters if his party retained Congress.North of the 49th parallel, the question now becomes: What’s next for Canada’s energy sector in light of this seismic shift?On Sunday, after being in trade talks with Prime Minister Mark Carney, Trump told reporters that Canada would “build the Keystone Pipeline.”“They’re gonna pay for it, and they’re gonna pay for all of it,” he said.“And we’re gonna give them the route, and it’s largely been determined, but they’ll build the Keystone Pipeline.”Meanwhile, Carney said that negotiators on both sides would continue to work towards a mutually beneficial agreement and didn't confirm Trump’s pipeline promise.A possible deal about a possible pipeline may now have problems with a Democratic Congress..WATCH: Trump says Keystone XL pipeline could be part of US-Canada trade deal.While Trump still has his veto powers and a new power shift in politics doesn’t mean that American oil production or projects will be shut down or cancelled overnight, it does raise the question of how much confidence Canadian investors should place in Washington going forward.Take the troubled history of the Keystone XL pipeline.Calgary-based South Bow and its American partner Bridger Pipeline LLC have proposed the Prairie Connector pipeline — a new project that could carry up to 550,000 barrels per day to Guernsey, Wyoming, and would use some of the previously installed Keystone infrastructure.Trump has already granted the Bridger Pipeline Expansion a presidential permit for its Montana border crossing, but other regulatory approvals are still required, and South Bow has already secured several 20-year commitments for 465,000 barrels per day from shippers, with a final investment decision expected mid-2027..The election does not automatically kill that proposal, but history has shown Democratic lawmakers place greater emphasis on environmental concerns regarding pipeline developments and energy infrastructure than their Republican counterparts.The original Keystone XL project was approved by Canadian regulators in 2010 before the Democrats under then-President Barack Obama rejected it on environmental grounds.Trump revived the project in 2017 after he took office, with construction finally beginning on the project in 2020 before the Democrats, this time under the Biden administration, again revoked the project’s permit in 2021, causing it to be formally terminated soon after.Canadian producers need to know whether the economics and relevant regulatory procedures will hold together long enough to get shovels in the ground.The proposed Pacific Link pipeline to the West Coast offers a new route to alternative customers in the Asian market and now Washington's political shift gives Ottawa another reason to see it approved.Another potential opportunity for Canada that could emerge from the midterms comes in the form of natural gas exports.If a Democratic-run Congress imposes more pressure and red tape on US LNG projects getting off the ground, international buyers could pursue alternative deals with Canadian producers..Currently, Canada’s West Coast LNG facility in Kitimat, BC, has been approved for a $33 billion expansion which would see the terminal double its production capacity from 14 million to 28 million tonnes of liquefied natural gas annually, which is music to the ears of customers in the Asian marketplace who are looking for more stable energy suppliers after the Iran conflict and the debacle around the Strait of Hormuz.However, taking advantage of the situation would depend on the federal government providing concrete assurances to potential investors regarding project economics and regulatory certainty.Energy and Natural Resources Minister Tim Hodgson seems confident Canada can rise to the challenge.In a September interview with Harvard Media, he pointed to federal tax changes, faster proposed approvals and anticipated Alberta royalty measures as reasons to expect substantial oil and gas investment.“New investment in Canada has the lowest effective tax rate of any major country in the world. The effective tax rate is just over 6%. It’s less than half the tax rate in the US and that’s gonna attract a lot of capital to the oil sands,” Hodgson said.“When I talk to the major oil and gas companies in this country, they are ecstatic and they’re ecstatic that we specifically included oil and gas in that deduction this time. And so it’s a clear signal that we want people to invest.”.Blackstone leads US$3.1 billion deal for stake in Mitsubishi’s LNG Canada subsidiary.There’s no time like the present, then, to turn that signal into projects. Carney has repeatedly defended Canada’s reputation as a dependable energy supplier.Opposition to Trump’s policies from within Washington doesn’t necessarily translate into support for every Canadian export or pipeline, but more access to overseas oil and LNG markets will give Canadian producers alternatives if American politics turn unpredictable or hostile toward the energy sector.If Ottawa’s energy strategy still depends on the right people winning elections south of the border, we should stop calling it a strategy.Canada has relied heavily on the US being its primary customer for oil and natural gas — 3.9 million barrels of crude oil a day were shipped to the US in 2025, or about 90% of Canada's crude exports — and that partnership is still important, but Canada shouldn’t keep putting all of its eggs in one basket.A Democratic congressional takeover may be cause for concern, but it’s also an opportunity for Canada to accelerate its own energy development.It’s a perfect time to put Carney’s “energy superpower” claims to the test.

ANALYSIS: Blue wave in Washington gives Canada fresh reason to expand energy exports

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