Canada and Alberta Align on Oil Export Strategy Amid Geopolitical Shifts
After years of tension, the Canadian federal government and Alberta have reached a consensus on expanding oil exports. This agreement comes in response to significant geopolitical changes, particularly the evolving trade relationship with the United States, Canada’s primary trading partner. The Canadian government has now expressed support for a new oil pipeline that will transport crude from Alberta to the West Coast, aiming to enhance oil exports to Asia. This pipeline is projected to facilitate the shipment of approximately 1 million barrels per day (bpd) of crude, tapping into the growing demand for oil in Asia.
The shift in Canada’s oil export strategy is largely driven by the need to diversify trade relationships, especially in light of tariffs imposed by the Trump Administration. Prime Minister Mark Carney’s government is focused on establishing Canada as an energy superpower, which includes increasing the volume of Alberta’s crude oil exported via tankers. Currently, over 95% of Canadian oil exports are directed to the U.S., making this diversification crucial for future economic stability.
The Trans Mountain Expansion (TMX) pipeline is currently the only route for exporting Alberta’s landlocked crude oil. The TMX has already seen its capacity tripled, allowing for a significant increase in oil production and exports. Alberta’s oil production reached a record high in 2025, averaging 4.1 million bpd, with a notable portion coming from oil sands. The expanded TMX has been instrumental in this growth, enabling Alberta to export oil to Asian markets, which previously had no access to Alberta’s crude.
Plans for New Pipeline and Increased Capacity
In a strategic move, the Canadian and Alberta governments signed an agreement in November to enhance oil exports to Asia. This agreement aims to address investment uncertainties and reduce emissions while paving the way for a new pipeline, provisionally named the West Coast Oil Pipeline. This project is currently undergoing preliminary assessments, with the Alberta government planning to submit it for designation as a project of national interest by July 2026.
Alberta is evaluating five potential ports on the West Coast for the new pipeline, with the port of Prince Rupert emerging as a favorable option due to its lower congestion levels. Premier Danielle Smith emphasized the importance of increasing export capacity, stating, “The world needs our energy exports, notably Asian markets.” The new pipeline project will require careful negotiations with First Nations and the provincial government of British Columbia, but both Alberta and the federal government are committed to advancing this initiative.
Meanwhile, the TMX is seeking to boost oil flows by 10% through the use of drag-reducing agents, which would enhance its existing capacity without increasing vessel traffic at the Westridge Marine Terminal. This move is expected to facilitate additional production in 2026, with analysts predicting a 2% growth in oil and gas exports for both 2026 and 2027. However, they caution that without new pipeline infrastructure, Alberta’s output growth could face constraints as early as 2028.
As Canada navigates its energy future, the alignment between the federal government and Alberta marks a significant step toward enhancing oil exports and reducing dependency on the U.S. market.
