Canada Designates Pacific Link Pipeline as First National Interest Project Under New Legislation
Prime Minister Mark Carney and Alberta Premier Danielle Smith announced the Pacific Link pipeline, a proposed million-barrel-per-day project from Alberta to British Columbia, as the first proposal deemed in the national interest under new legislation. While officials cite automation and industry consolidation as safeguards against past cost overruns, analysts warn of high estimated costs and labor challenges.
Prime Minister Mark Carney and Alberta Premier Danielle Smith have announced the Pacific Link pipeline, a proposed million-barrel-per-day oil pipeline running from Alberta to a tanker export terminal in southern British Columbia. The project is the first proposal deemed in the national interest under legislation passed last year, subjecting it to a streamlined review process shepherded by the Calgary-based major projects office.
Carney described the expected outcome of the project not as a "boom" but as "sustained growth," citing lessons learned from past infrastructure projects. Smith highlighted the use of autonomous oilsands haul trucks as a factor that will reduce labor pressure and housing shortages compared to previous decades. These technical innovations are intended to avoid the severe social and economic side effects that characterized earlier periods of rapid expansion.
The governments pointed to historical precedents to justify their approach. The last greenfield oilsands mine built was Fort Hills, operated by Suncor Energy Inc., which saw its cost balloon from $13.5 billion to over $17 billion between its 2013 approval and 2018 startup.
Despite official optimism regarding automation and a more consolidated industry, significant hurdles remain. Analysts estimate the total cost of the Pacific Link project at $35 billion to $45 billion, with potential additional costs of $5.5 billion to $6.5 billion due to inflation and rising interest rates. Lance Mortlock of EY Canada warned that tens of thousands of workers will be needed across the country for multiple major projects, raising concerns about labor availability.
Market participants are already assessing the financial implications. Pembina Pipeline Corp. holds a 10 per cent interest in the Pacific Link project, though this remains subject to a final investment decision. CIBC Capital Markets analysts identified Keyera Corp. and AltaGas Ltd. as best positioned to benefit from increased oilsands production, while Gibson Energy Inc. could win on infrastructure growth. TC Energy Corp. has also been noted by analysts as a stock that could see tailwinds from the project.