Canada Surges Forward on Oil Plans

Despite being the world's fourth largest producer of oil, with the fourth-largest proven oil reserves in the world, Canada is not always an easy place to be in the oil business. Infrastructure shortcomings, environmental concerns, and regulatory uncertainty have all played a role in making Canadian resource development a difficult undertaking.

Now, with a global energy crisis in full swing and a ruptured relationship with the U.S. threatening further economic shock, Prime Minister Mark Carney is moving quickly to make up for lost time. On July 2, 2026, one day after the Canada Day holiday, Carney joined British Columbia Premier David Eby in Vancouver to announce the Canada-British Columbia Cooperative Prosperity Agreement. A few hours later, he joined a press conference with Alberta Premier Danielle Smith to announce progress on the west coast pipeline proposal to increase Canada's oil exports to Asia and reduce its economic dependency on the U.S.

Big Wins for B.C. and Environment

The prosperity agreement contains the building blocks for the construction of a major energy corridor through B.C. Canada has extensive regulatory requirements for such projects, including a constitutional duty to consult impacted Indigenous groups, which stems from Section 35 of Canada's Constitution Act, 1982. According to the agreement, both the federal and provincial governments will work with stakeholders on the permitting and financing of several projects that boost Canadian prosperity while protecting the environment and respecting the priorities of Indigenous communities.

B.C. is a significant producer of liquefied natural gas (LNG), and the agreement supports the development of LNG projects, including LNG Canada Phase 2, Ksi Lisims LNG, Cedar LNG, and Woodfibre LNG. It also includes an investment of $500 million to expand Red Chris Mine to increase Canadian copper production by 15% for clean energy and manufacturing projects.

There will also be an investment of $3.9 billion towards the capital costs of the North Coast Transmission Line to provide clean electricity to B.C. communities. According to the agreement, the project could create $10 billion in new economic activity and become the backbone of a clean-energy corridor that includes the Yukon Territories and Alberta while reducing annual emissions by as much as 3 million tonnes.

B.C. has some of the busiest ports in North America, making the province a critical component in any plans to export fossil fuels to new markets. The agreement contains proposals to support B.C. ports by investing in infrastructure upgrades at the Port of Vancouver, investing in highway upgrades along Highway 99 to reduce a transport bottleneck in the Lower Mainland, and to enhance the productivity of the Port of Prince Rupert and the Port of Stewart to export Canadian critical minerals.

The agreement also contains proposals for environmental protections, including a National Carbon Credit Framework, protection for Canada's killer whales along the B.C. coast, and an ocean protection plan for coastal ecosystems.

“Today's historic agreement creates the conditions to transform the B.C. and Canadian economies to become more resilient, sustainable, and independent,” said Carney in a news release. “Canada and British Columbia are broadening and accelerating major energy projects and trade corridors, protecting our land, wildlife, and waters, giving workers the support and opportunities they need to help build Canada strong, and creating extensive, large-scale opportunities for true partnerships with First Nations.”

For all the pomp surrounding what the agreement includes, the most noteworthy element is what it excludes.

Much to the ongoing irritation of the Alberta government, the agreement will retain a tanker ban on B.C.’s north coast. The Oil Tanker Moratorium (Bill C-48) was passed in June 2019 under Prime Minister Justin Trudeau and prohibits tankers carrying more than 12,500 tonnes of crude oil from operating along the northern B.C. coast. Alberta has long viewed the north coast as a logical place for a pipeline to move oil to the B.C. coast for export to foreign markets, but the tanker ban has frustrated those efforts. It has also raised questions about how the memorandum of understanding on energy development in Alberta could come to fruition with the ban in place. Environmentalists have argued that even a small spill could cause significant damage to important ecological systems, which would have severe environmental and economic impacts for the communities that rely on them.

“The fact that the tanker ban is uplifted, respected, and committed to again by the federal government in this agreement is a significant win for British Columbia,” said Premier Eby at a press conference.

Alberta Submits Its Energy Proposal

Later in the day, Prime Minister Carney and Alberta Premier Danielle Smith were in Calgary to announce the official submission of Alberta's proposal for a west coast pipeline to the Major Projects Office (MPO). The proposed pipeline - a partnership between the governments of Canada and Alberta, Pembina Pipeline Corporation, Trans Mountain Corporation, and Indigenous communities - will transport one million barrels of oil a day to the coast of B.C. for shipment to global markets.

With a pipeline to B.C.’s north coast off the table, Smith proposed a route through southern B.C. to the coast, running from Bruderheim, Alberta, to Roberts Bank Terminal in Delta, B.C., following the infrastructure for the existing Trans Mountain Pipeline.

As a project in the national interest under Bill C-5, the proposal will undergo a streamlined permitting process and review of impacts on the environment and Indigenous communities. The proposal also includes the Pathways Project, a carbon capture and storage project aiming to reduce 16 million tonnes of emissions each year. It's also expected to produce as many as 140,000 jobs during construction and operation.

In a press conference, Smith emphasized that the project would have implications far beyond the Canadian borders.

“The world is asking Canada to step up and provide a more stable, democratic, and reliable energy supply that countries around the globe are looking for,” said Premier Smith at a press conference. “This is not just another energy project. It's a nation-building project that will unlock wealth and opportunity for millions of people across the country and provide desperately needed energy to millions more across the globe.”

Not Everyone is Happy With Proposals

Carney's reputation as a progressive leader and environmental advocate has come into question during his intense nation-building activities and approving a new oil pipeline is not helping.

Environmental advocacy group Stand.earth launched a petition asking Carney to withdraw his support for the pipeline and accelerate the transition to renewable energy.

“It's crystal clear: Smith wants to fast-track this project and wants the public dollars to buy it. And it makes no sense,” said the petition. “While the rest of the world is moving towards renewable energy, Smith wants to hitch our wagon to a dying fossil fuel industry. We know it's only going to line the pockets of foreign fossil fuel executives - while the rest of us pay for it.”

In a LinkedIn post, Simon Donner, professor at the University of British Columbia and director of the Climate Solutions Research Collective, took aim at the proposed carbon credit framework in the B.C. prosperity proposal, focusing on the potential use of credits generated through sustainable consumer activities like the purchase of electric vehicles and nature-based solutions.

“For a trading system to achieve actual emissions reductions, any emissions credits for sale need to be for activities that fully counteract the emissions,” said Donner, who noted that while purchasing EVs, spending on retrofits, or conserving forests are all positive climate activities that can avoid future emissions, they should not generate marketable credits in an emissions trading system because they don't remove emissions from the atmosphere.

Despite the positive mood in B.C. in relation to the prosperity proposal, Premier Eby didn't shy away from expressing his thoughts on a proposed Alberta pipeline to the B.C. coast, to which he has long been opposed.

“This agreement doesn't require us to support any pipeline proposal from Alberta,” said Eby at the press conference. “We recognize our constitutional position, and we do not have the authority to stop a new pipeline. We will not be going to court to fight a pipeline project. Instead, we will fulfill our constitutional obligations in good faith. Pipelines are federal jurisdiction.”