Canada's New Oil Strategy: A Pipeline Pivot to Asia

After a long period of disagreement, Canada's federal government and the oil-producing province of Alberta are now aligned on a new vision for the country's energy exports. A significant shift in trade relations with the United States has catalyzed federal support for a new oil pipeline from Alberta to Canada's West Coast, a project designed to ship nearly 1 million barrels per day (bpd) of crude to Asia and tap into the world's fastest-growing energy market.

A Strategic Shift Away from the U.S. Market

Canada is actively diversifying its trade relationships in response to tariffs and ongoing trade threats from the Trump Administration, which have strained the historically close partnership. The government, led by Prime Minister Mark Carney, aims to establish Canada as an energy superpower by increasing seaborne crude exports from Alberta to Asia.

This move is critical for reducing Canada's heavy reliance on the U.S., which currently purchases over 95% of all Canadian oil exports. The expanded Trans Mountain pipeline (TMX) is, for now, the only route shipping landlocked Albertan crude to tankers on the West Coast.

The Trans Mountain Pipeline's Success Story

For years, Alberta has advocated for more coastal pipeline access to capitalize on its increasing crude oil supply. The province's oil production reached a new record in 2025, averaging 4.1 million bpd—a 4.2% increase of 166,000 bpd from 2024. Oil sands accounted for 84% of this output.

The TMX expansion was a game-changer, tripling the pipeline's capacity from 300,000 bpd to 890,000 bpd. This expansion directly fueled Alberta's record production and opened the door for significant exports to Asia.

According to ATB Economics, the value of Alberta's oil exports to Asia climbed from zero to over US$804 million (C$1.1 billion) by October 2025, following the TMX expansion. While analysts expect pipeline enhancements to support production growth in 2026 and 2027, they warn that capacity could become a constraint again as early as 2028 without another new pipeline.

Pushing the Limits of Existing Infrastructure

The demand for Canadian crude is already testing current limits. Trans Mountain Corporation recently sought approval from the Canada Energy Regulator to boost oil flows by 10% using drag-reducing agents (DRA). The company stated this project would not increase vessel traffic beyond what was previously approved for the expansion.

Alberta's Premier Danielle Smith welcomed the move, stating, "Alberta is happy to see TMX working on increasing oil exports by 10%." She added, "The world needs our energy exports, notably Asian markets. We will continue pushing for more export capacity, including a new pipeline to the Canadian northwest coast."

Planning the Next Big Pipeline Project

The federal government is now firmly behind this push. As early as last July, Prime Minister Carney suggested a new oil pipeline to the Pacific coast was "highly likely" to be designated a project of national interest. This policy shift was solidified during a visit to China, where Carney signed a strategic energy and trade cooperation agreement, signaling "a new era" in relations.

In November, the governments of Canada and Alberta signed an agreement to boost oil exports to Asia, reduce investment uncertainty, and address emissions. This accord paves the way for a new, Indigenous co-owned pipeline.

The project, provisionally named the West Coast Oil Pipeline, is currently in a preliminary assessment phase, with a technical advisory group evaluating potential routes. Alberta's government plans to submit the project to Canada's federal Major Projects Office by July 2026.

In a recent interview with Bloomberg, Premier Smith confirmed that five potential West Coast ports are under consideration. The port of Prince Rupert in northwest British Columbia appears to be a leading candidate due to its less congested location, which could also facilitate exports of other high-value products.

While the project will inevitably face complex negotiations with First Nations and the government of British Columbia, the unified support from both Alberta and the federal government marks a decisive step toward diversifying Canada's energy future and reducing its dependence on the U.S. market.