Key Takeaways From the Alberta and BC Infrastructure Deals With Ottawa

Prime Minister Mark Carney sits with Alberta Premier Danielle Smith, left and B.C. Premier David Eby at the start of a meeting in the prime minister's office in Ottawa on Jan. 28, 2026. The Canadian Press/Adrian Wyld

Prime Minister Mark Carney’s July 2 announcement with Alberta Premier Danielle Smith was presented as a major step forward in getting a new oil pipeline built from Alberta to the B.C. coast.

It followed an agreement earlier the same day between the federal government and B.C., which has been opposed to the pipeline project, with Ottawa committing to several initiatives benefiting the province along with major funding.

Here’s a look at the key takeaways from the two agreements and what they mean going forward.

New Southern Route

The proposed pipeline is meant to carry over 1 million barrels of crude oil per day from Bruderheim, Alta., near Edmonton to Delta in southern B.C., following mainly along the existing Trans Mountain pipeline corridor which runs through central Alberta and southern B.C.

Smith had previously said that a northern route going to destination ports such as Prince Rupert, B.C., or Kitimat, B.C., was preferable for Alberta, due to better shipping economics, shorter distances to access Asian markets, and the ability to use deep-water northern ports for larger oil tankers.

However, B.C. Premier David Eby has long said he opposes any change to the existing oil tanker ban on B.C.’s north coast and Ottawa’s July 2 agreement with B.C. agreed to keep the ban in place unchanged.

Workers position pipe during construction of the Trans Mountain pipeline expansion in Abbotsford, B.C., on May 3, 2023. The Canadian Press/Darryl Dyck

Despite a Nov. 27, 2025 memorandum of understanding (MOU) between Ottawa and Alberta agreeing that the federal government could make adjustments to the oil tanker ban as necessary in the future, Carney has also stated repeatedly that he won’t overrule objections from provinces or indigenous opponents to major projects.

For her part, Smith says that on reconsideration the new route turned out to have “key advantages.”

“The southern route had key advantages of using an existing pipeline route, existing established relationships with the indigenous partners, and potential partners along that line, as well as the ability to reduce the amount of time to get it to market,” she said July 2.

Oil Tanker Ban Stays

The July 2 B.C.-Ottawa agreement commits to keeping the oil tanker ban in place on B.C.’s north coast, saying it will be kept “without alteration, suspension, or narrowing of scope.”

Eby said keeping the oil tanker ban in place is part of “protecting British Columbia’s pristine northern coast and the $2 billion-plus economy that relies on it.”

The federal Oil Tanker Moratorium Act went into effect in 2019. It prohibits oil tankers with over 12,500 metric tons of crude oil or oil products from loading, unloading, or stopping at ports or marine facilities from the northern apex of Vancouver Island to the Alaska border.

The law was passed under the Trudeau government with the stated justification of safeguarding B.C.’s northern coast from potential oil spills and protecting coastal communities and environmental habitats.

Very Large Crude Carriers (VLCCs)

Smith’s July 2 remarks also referenced another part of the calculus for the proposed pipeline and energy economics: Very Large Crude Carriers (VLCCs).

VLCCs are large oil tankers that can transport approximately 1.9 to 2.2 million barrels of crude oil per shipment.

Instead of Trans Mountain’s existing Westridge Marine Terminal in Burnaby, B.C., which loads oil onto Aframax-sized tankers, the proposed pipeline would go to a deep-water port that could handle VLCCs. Aframax-class tankers generally ship a maximum of roughly 750,000 barrels.

Analysts have noted that usage of VLCCs can significantly lower per-barrel shipping prices for long-distance transport of oil to Asia.

If built as described, the project could give Canada a rare, and possibly unique terminal save for Alaska, fully-laden, VLCC-capable crude export terminal on North America’s Pacific Coast.

A satellite image shows the very large crude carrier (VLCC) Skipper off Port Jose, Venezuela, on Nov. 14, 2025. 2025 Planet Labs PBC/Handout via Reuters

Government-Led Pipeline Project

The proposed pipeline would be owned through a new joint venture led by the federally owned Trans Mountain Corporation, the Alberta Petroleum Marketing Commission—a provincial corporation, and Pembina Pipeline Corporation.

Pembina would own a 10 percent interest in the pipeline during its construction with the option to buy another 10 percent once it becomes operational, with Trans Mountain and the commission splitting the remaining ownership equally.

This makes the project primarily a federal and Alberta joint venture for most of the time it is under construction.

Trans Mountain Corporation would be responsible for developing, completing, and later commercially operating the pipeline as well as securing the necessary permits and regulatory approvals, land access, and required stakeholder and indigenous engagement.

Pembina would primarily be a strategic advisor providing expertise as the pipeline moves forward.

Carney said the “vast majority” of investment in the new pipeline will come from the private sector and described government backing and incentives as “catalytic” in nature.

Private industry has been reluctant to get involved in the pipeline, with Enbridge CEO Greg Ebel saying earlier this year that his company would not be involved in any funding or leadership of a new pipeline to the West Coast due to ongoing regulatory hurdles and uncertainty, though he later softened his stance.

Cenovus CEO Jon McKenzie has also said that Canada’s extensive regulations make it difficult to privately finance a new pipeline.

Speaking July 2, Smith said government backing is needed because of a history of cancelled projects such as Northern Gateway, Keystone XL, and Energy East, that have left private companies hesitant to move forward.

“We have pipeline companies that have literally spent billions of dollars in recent years on failed regulatory approval process, that’s the environment we’re finding ourselves in,” Smith said.

Prime Minister Mark Carney meets with British Columbia Premier David Eby at the Legislative Assembly of British Columbia in Victoria on April 7, 2025. The Canadian Press/Sean Kilpatrick

What BC Gets

In its July 2 multi-billion-dollar cooperative prosperity agreement with Ottawa, B.C. received a number of initiative commitments and payouts from Ottawa, including significant federal commitments for a number of B.C. infrastructure and resource projects.

This included federal commitments on LNG projects, support for the North Coast Transmission Line, Port of Vancouver and Roberts Bank infrastructure, Prince Rupert and Stewart port development, funding for the expansion of the Red Chris Mine, as well as more support for softwood lumber, steel, affordable childcare, and enhanced protection for whales.

Ottawa also agreed to pay up to one-third coverage of the cost of replacing the George Massey Tunnel up to a maximum of $3 billion.

Specified federal funding in the agreement amounts to roughly $7.8 billion, along with unspecified totals of funding for several of the other projects that are named.

In addition to agreeing to keep the oil tanker ban in place, Ottawa also said it will negotiate a possible annual royalty payment to the province from the pipeline operator and set up a reserve fund for the province and First Nations in case there is an oil spill or environmental harm from the pipeline or tankers.

Ottawa also agrees that First Nations must be fully consulted and offered economic opportunities and possible ownership stakes as well as offerings to buy equity in the pipeline via loan guarantees from the federal government.

“Although B.C. does not seek this project, it recognises its constitutional obligations and commits to acting in good faith to engage in the necessary routing and permitting discussions, within its jurisdiction, provided the following reciprocal commitments are met,” the agreement reads.

What Alberta Pays

The MOU between Ottawa and Alberta in November of last year saw Alberta agree to support indigenous co-ownership, increase its industrial carbon tax, reduce methane emissions, and support the construction of a carbon capture system along with the proposed West Coast oil pipeline.

In return, Ottawa agreed not to implement its proposed oil and gas emissions cap, pause clean electricity regulations in the province, and to streamline environmental assessments.

In the July 2 agreement with Ottawa, the new route avoids a need to adjust the oil tanker ban while the Oil Sands Alliance will head the Pathways Project which Carney said will reduce emissions by 16 million tonnes per year by 2035. The cost of the Pathways Project has been estimated at between $16.5 billion to $20 billion.

Prime Minister Mark Carney and Alberta Premier Danielle Smith announce a proposed pipeline from Alberta to the B.C. coast in Calgary on July 2, 2026. The Canadian Press/Todd Korol

Carney described Pathways as “the world’s largest carbon capture and utilization and storage project” and said it will be the equivalent of “taking 90% of the cars in Alberta off the road.”

Smith presented the investment in the carbon capture project as the “environmentally responsible” move and a necessary part of working towards Alberta’s goal of doubling oil production to 8 million barrels per day in the next 10 to 15 years.

Criticism

The pipeline proposal and more recent agreements between Ottawa and the two provinces have faced criticism from several sources.

This includes a recent study from the Fraser Institute which says that the November, 2025, MOU between Alberta and Ottawa which raises the province’s industrial carbon tax and includes carbon capture requirements makes the pipeline less economically competitive than energy-producing American states.

Heather Exner-Pirot of the Macdonald-Laurier Institute has also greeted the July 2 announcements with overall positivity, but noted that B.C. is getting “maximum financial concessions.”

“Today is a good day but let’s be clear, Eby is extracting maximum financial concessions from Canada in exchange for not opposing a pipeline. Many billions of dollars for what are normally provincial responsibilities,” she posted July 2 on X.

The decision to keep the oil tanker ban in place has also been criticized by Tory Leader Pierre Poilievre, who said it is a “nonsensical” double standard.

“Mark Carney’s announced today that he is keeping the Liberal shipping ban on Canadian oil, while American tankers are free to ship in the same waters,” Poilievre posted on X. “That is a costly and nonsensical decision.”

Poilievre has been broadly critical of Carney’s energy policies, saying he has kept in place many policies that stifle development, such as the industrial carbon tax.

Federal NDP Leader Avi Lewis criticized the pipeline agreement, saying that the Liberal government is protecting “the profits of Big Oil.”

“The opaque and confusing public-private partnership ownership structure means it’s very likely that we, the public, will not only bear the risks and the damages, but also the lion’s share of the costs,” he said.

Big Picture

The announcement of agreements with B.C. and Alberta fits into Carney’s broader energy-focused pivot. It comes after a June 29 “forward-guidance video” in which the prime minister said Canada’s emissions would be higher in the next few years than under the Trudeau administration’s plan.

Regarding the pipeline and associated economic agreements with B.C. and Alberta, Carney said they will “catalyze well over $200 billion in direct investments in Canada” and create over 175,000 new jobs across the country.

While Alberta now has a pathway to a potentially viable pipeline with VLCC capacity, as well as a federal partner, it still awaits the completion of regulatory processes, as the Major Projects Office considers its submission for the project to be designated in the national interest by Oct. 1. If so designated, its approval could be sped up to within two years.

For its part, B.C. gets the oil tanker ban preserved, negotiation of royalty payments, major infrastructure and economic investments, and continuing leverage as the project moves ahead.

Ottawa gets to tout a project of national unity and advance the argument that emissions reductions can coexist with major development of conventional energy.

Alberta has given up on the northern route and accepted that Ottawa calls the shots on carbon reduction. B.C. has accepted it does not have the legal jurisdiction to stop an interprovincial pipeline and Ottawa has acknowledged that the private backing for a pipeline in today’s regulatory climate is lacking.