Canada has little choice but to expand pipeline capacity and build infrastructure to ship oil beyond North America
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Global energy leaders are beginning their annual pilgrimage to the George R. Brown Convention Centre in Houston, Texas, for the week-long CERAWeek conference.
More than 8,000 delegates are converging to discuss, deliberate and hear leaders share their views on the current state of the energy industry. Participants and speakers include U.S. Energy Secretary Chris Wright, energy ministers from OPEC+ members Nigeria, Libya and Kazakhstan, and CEOs from Saudi Aramco, Chevron, Shell, BP and TotalEnergies, to name a few.
The meeting is occurring amid an imminent downturn. The number of variables affecting the industry is growing daily. Oil prices are plummeting. Oil futures closed Friday with a gain of one per cent, paring some losses earlier in the week, but remain weighed down by bearish sentiment over a possible increase in OPEC+ output and fears of weak demand.
 With pipeline projects stalled and Washington’s policies in flux, Canada’s energy security is at risk. |
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West Texas Intermediate fell three of five trading days on the New York Mercantile Exchange last week, including Wednesday’s plunge of US$1.95 per barrel, sending prices to lows last seen on Sept. 10.
Since returning to the White House, U.S. President Donald Trump has been exhorting the energy industry to “Drill, baby, drill” and directing government agencies to slash red tape to maximize U.S. oil and gas output, already at record levels before he took office. He has also ended a pause on new gas export project approvals and overturned a ban on drilling in federal waters.
The overall direction and impact on global energy markets have generated some confusion. Trump’s trade and foreign policy issues with Canada and Mexico will drive up the cost of millions of barrels of heavy oil that U.S. refiners require. A sense of uncertainty grips the markets. Oil flow from Canada to the U.S. slowed on three major pipelines Tuesday morning, hours after the introduction of U.S. tariffs on Canadian crude imports, Wood Mackenzie reported.
The U.K.-based data provider monitors real-time data covering 90 per cent of oil capacity crossing the Canada-U.S. border. Wood Mackenzie detected reductions on three major pipeline systems delivering Canadian crude to U.S. markets.
Further, Trump’s rapid pivot in foreign policy with Russia could upend global oil flows and reduce the European market for U.S. oil and gas if the U.S. eases sanctions on Russian energy in exchange for a deal to end the war in Ukraine, Reuters reported.
Trump’s termination of a licence allowing Venezuelan oil exports to the U.S. and threats to drive Iranian oil exports to zero also suggest further disruptions to global oil markets. “It’s a revolution in energy policy that is unfolding … the industry is trying to catch its breath,” Daniel Yergin, a leading energy analyst and vice-chairman of S&P Global, told Reuters.
In the wake of these developments, calls to diversify Canadian oil markets away from the U.S. are gaining momentum. For decades, Canada has depended almost exclusively on the U.S. as its primary oil export market. Roughly 98 per cent of Canadian crude oil exports flow south due to geographic convenience and existing pipeline infrastructure. However, this reliance has left Canada vulnerable to U.S. policy shifts, tariffs, and changing energy strategies. The push for diversification is not new, but efforts to build alternative export routes, such as the now-cancelled Energy East pipeline, have faced regulatory and political hurdles from the Trudeau government.
Much is at stake for Canada. It must consider ways to diversify oil export markets, both in the short term and through exploring longer-term solutions, such as a new east-west pipeline, Canadian Natural Resources Ltd. president Scott Stauth told Reuters on Thursday. Stauth added that Canadian Natural, Canada’s largest oil and gas producer, supports plans recently announced by pipeline companies Enbridge Inc. and Trans Mountain Corp. to enhance oil transport capabilities by optimizing and debottlenecking existing lines.
“We think those discussions are very prudent,” Stauth said. “I also think as Canadians we should look at even larger and more long-term project opportunities to create broader markets for our oil, even outside North America.”
Amid tariff threats, Trans Mountain Corp. is exploring expansion projects that could add between 200,000 and 300,000 barrels per day of capacity to its system. The Trans Mountain pipeline runs from Alberta to the British Columbia coast, where crude is loaded onto tankers for shipment to overseas markets. Enbridge also plans to invest approximately C$2 billion to expand its Mainline pipeline network, transporting crude from Alberta to eastern Canada and the U.S. Midwest. South Bow Corp., the Canadian company operating the Keystone pipeline system from Alberta to key U.S. refining markets, also told Reuters Thursday that supply growth from the Western Canada Sedimentary Basin exceeds expectations.
In a conference call with Reuters, South Bow CEO Bevin Wirzba said his company is in talks with customers to assess commercial interest in new projects to enhance export access. At the political level, calls for a new east-west pipeline are also gaining strength. Such a pipeline would address the Canadian oil industry’s desire for new export capacity and reduce the country’s dependence on the U.S. market. While the project would be a multibillion-dollar undertaking spanning years, Stauth believes it is necessary. “I do think it could happen,” he said. “It’ll take the will and support of governments, communities and individual Canadians.”
However, past attempts to build cross-country energy corridors have been met with resistance. Environmental opposition, federal and provincial regulatory barriers, and political disagreements have derailed previous projects. If Canada is serious about energy security, these issues must be addressed through policy reforms and proactive government support.
Tariffs and Trump’s unpredictability leave Canada with little choice but to develop infrastructure enabling shipments of oil and other exports to markets beyond the U.S. Meanwhile, global energy dynamics are shifting. OPEC+ policies, growing interest in renewables, and the evolving role of natural gas in the global energy transition are reshaping markets. Canada must adapt by securing stable long-term buyers for its oil and investing in infrastructure that ensures market access.
The era of total reliance on the U.S. market for Canadian exports is over. Canada must take decisive steps to build the infrastructure necessary for global market access. This year’s CERAWeek is unfolding in an increasingly unpredictable environment, making these discussions more urgent than ever.
Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.
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