West Coast Oil Pipeline: Is the Next Barrel Worth the Price?

Highlights

• The proposed West Coast Oil Pipeline (WCOP) would move 1 million barrels per day (b/d) of Alberta heavy crude to a marine terminal in southern British Columbia, increasing oil exports to Asian markets and reducing Canada’s dependence on the US market. Oil demand is expected to keep growing in Asia, but demand for Canadian barrels specifically remains uncertain.
• WCOP could be a net positive, but only if costs are contained. Alberta’s current pipeline cost estimate of $35B to $44B is still early-stage and excludes financing costs. Canada’s recent infrastructure record—especially the Trans Mountain Expansion Project (TMX)—shows how delays, permitting complexity and financing during construction risk undermining the economics of an otherwise strategically valuable project.
• The new pipeline could reduce bottleneck risk, but any narrowing of the differential between Western Canadian Select (WCS) and West Texas Intermediate (WTI) would likely be temporary. Its main benefit lies in increasing production and exports, which would require a major increase in capital investment, effectively reversing the industry’s current focus on capital discipline and shareholder returns. Canadian producers have the cash to fund production growth, but new pipeline capacity alone will not be enough to trigger a large investment wave.
• The project could deliver economic benefits, but current estimates of those benefits should be taken with a grain of salt. Economic gains from construction are temporary and sensitive to domestic content, labour availability and input costs, while the benefit from operations is better understood as a higher level of GDP, not a recurring annual growth boost.
• Government royalties and tax receipts help justify public funding, especially given Alberta’s recurring bitumen royalty upside and Ottawa’s broader tax gains. But cost overruns are also an important consideration in large infrastructure projects. A project structure that aligns risks and returns among governments, producers, shippers, Indigenous partners and external investors helps support long-term viability and broad stakeholder participation.