RBC Chief Economist: New B.C. Oil Pipeline Requires Cultural Shift, Not Just MOU
According to Frances Donald, chief economist at the Royal Bank of Canada, supporters of Canada's energy sector who are hoping for a new oil pipeline to the West Coast will need more than a memorandum of understanding between Alberta and Ottawa to achieve their goal. Donald emphasized that the industry requires consistency over an extended period to build the confidence necessary for investment.
"This is an entire sector that has repeatedly been pushed into a position where it could not grow," Donald told an audience in Calgary during a discussion with Calgary Chamber of Commerce chief executive Deborah Yedlin. "It is not one person, but it is a change of culture within a country. We cannot expect that to come in one year with one policy or one pipeline."
Industry Calls for Policy Consistency
Donald explained that businesses, including those in oil and gas, need holistic and sustained policy frameworks to shift confidence after more than a decade of uncertainty. "Everybody wants to hear there's one thing we can do that could change the story," she said. "But that's not a holistic way to expect business confidence to shift after over a decade of having moved the pendulum in the other direction."
For years, oil company executives have argued that federal policies hindered pipeline construction and expansion. While Prime Minister Mark Carney vowed to make Canada an "energy superpower" and struck a deal with Alberta that could pave the way for a new pipeline to the British Columbia coast, no private proponent has expressed interest in the project yet.
Challenges and Opposition
Despite governmental support from Alberta and Ottawa, the proposed route to B.C.'s northern coast has triggered strong opposition from some First Nations and Premier David Eby. Analysts note that while progress has been made on the energy MOU—with draft agreements on methane equivalency and impact assessments reached ahead of the April 1 deadline—key issues remain unresolved.
The other two critical components, an agreement on industrial carbon pricing and a deal on the multibillion-dollar Pathways carbon capture and storage network, are overdue by more than two weeks. Mark Parsons, chief economist of ATB Financial, warned that further delays could exacerbate domestic policy uncertainty. "I don't think we can keep on getting further delays, because that just creates more domestic policy uncertainty," Parsons stated.
Need for Fundamental Changes
Some players in Alberta's oilsands remain hopeful, but significant changes are still required, particularly around industrial carbon pricing. Jon McKenzie, chief executive of Cenovus Energy, told the Calgary Herald that it will be difficult for the industry to grow production without "fundamental" changes to government policies and regulations.
Parsons highlighted the importance of certainty amid rising geopolitical tensions, such as the war in Iran. "We have to make things as certain as possible for Canada's producers," he said. "That will create the appetite to invest in these projects, but we're not there yet. We're much closer today than we were a year or two ago, but we have to keep momentum going."
The MOU has been critical in resetting the relationship between Alberta and Ottawa, but analysts caution that it may not lead to a meaningful endpoint without broader cultural and policy shifts. Donald's remarks underscore that achieving a new oil pipeline to B.C. is a complex endeavor requiring more than just intergovernmental agreements—it demands a sustained transformation in Canada's approach to energy and investment.
