September 2025 Vol. 80 No. 9
Features
Canada eyes new pipelines to boost energy security, cut U.S. reliance
By Eugene Gerden, Contributing Writer
Canada plans to accelerate building of new underground energy infrastructure that will be primarily oriented on domestic supplies, allowing the country to reduce its dependence on the United States.
Despite Canada’s strict environmental commitments, both oil and gas continue to be key components of the Canadian energy structure at present.
In the case of gas, according to data of the Canadian Climate Institute, 44 percent of homes and the majority of businesses still rely on it for heating. That means the country continues to be heavily dependent on gas supplies and requires a reliable gas pipelines network. In this regard, construction of new oil and gas pipelines that will ensure more-reliable and stable supplies within the country will remain the priority for years to come.
According to experts of the Canadian Energy Center, despite Canada’s status as one of the world’s largest oil and gas producers, more than half of the country’s own population faces serious interruptions in supplies and high prices.
That means the need of building of new pipeline infrastructure across the country to reduce exports will contribute to the current reduction of dependence of Canada on its major oil and gas customer – the U.S. Implementation of these plans is important, given the current trade tensions between the two countries and cloudy prospects for the future.
According to earlier statements made by Canada’s Natural Resources Minister Jonathan Wilkinson, Canada should consider building a new west-east oil pipeline, due to current tensions and uncertainty around the U.S. As the Canadian oil sector is booming at present, it is currently unclear whether the U.S. will continue imports of both Canadian oil and gas, at least in the same volumes as in the past.
Wilkinson commented, “I think we need to reflect on that. That creates some degree of uncertainty. I think, in that context, we will, as a country, want to have some conversations about infrastructure that provides greater security for us.”
Also, according to Canadian authorities, building alternative routes is important given that Canada’s oil production is largely landlocked, with most production being far from North America’s key transport hubs and refineries. That means transportation, even to the U.S. market, is associated with high costs for most of Canadian producers and requires the design of alternative routes and building of a new pipeline infrastructure.
U.S. market
Still, the U.S. market remains extremely important for Canadian oil producers, as well as pipeline operators. This is also confirmed by statistics from the Royal Bank of Canada, which show that Canada’s share of U.S. crude oil imports has grown significantly over the past few decades, and now represents 24 percent of total U.S. oil consumption.
At the same time, the Canadian natural gas accounts for 9 percent of total U.S. natural gas consumption. It is expected that a significant part of these oil and gas volumes, which were previously supplied to the U.S. via pipelines, will soon be re-directed to the Canadian market and other foreign markets also in the form of LNG.
Wilkinson added that the present lack of cross-country pipelines in Canada could be considered as a “vulnerability.”
Currently, Canada is accelerating its efforts for strengthening its energy security. Steps in this direction have been taken, as the country has recently completed building two massive pipelines across British Columbia, the westernmost province of Canada.
On May 1, 2024, the Trans Mountain pipeline expansion (TMX) started delivering crude oil from Alberta to the coast of British Columbia. As for Alberta, this landlocked state accounts for the bulk of oil and gas production in Canada and, according to analysts, will need additional markets already in the near term. In general, the completion of Trans Mountain pipeline expansion has nearly tripled Canada’s oil shipping capacity, creating conditions for the expansion in the markets of Asian states, particularly South Korea, China and Japan in the next several years.
In the meantime, in addition to Trans Mountain, TC Energy, one of the largest energy companies in Canada and the entire North American region, earlier completed work on the 416-mile (670-km) Coastal Gaslink pipeline. The new pipeline provides the first direct path for Canadian natural gas to reach international markets, when the LNG Canada export terminal in Kitimat begins operating later this year. The company has also not ruled out the possibility of building a second phase of the pipeline.
In general, building new pipeline infrastructure for transportation of gas is an acute need for Canada at present. This is also important given that gas production in Western Canada, over the next decade, is expected to grow by at least 30 percent. In the meantime, for such Canadian provinces as Ontario and Quebec, building pipeline infrastructure will also be essential, given that about half of the natural gas they consume is imported from the United States. This poses a serious threat to their energy security amid the current unstable geopolitics.
In the case of oil, more pipeline capacity will be needed soon. This is mainly due to the ongoing boom of Canada’s oil sector, which has already reached all-time highs of more than five million barrels per day.
More oil pipelines
While the growth of oil production is ongoing, this is associated with the need for building more pipeline space within the next couple of years. The latter has already led to reaction of some major players and operators. For example, Jason Balasch, Trans Mountain’s vice-president, recently said the company is looking at projects that could add up to 300,000 barrels per day (bpd) of capacity within the next five years.
Also, Enbridge, Canada’s biggest oil pipeline company, is preparing to expand its major export pipelines. That will be part of the plans of Alberta province to double crude oil production in the coming years. The company expects it can add as much as 300,000 bpd of capacity out of Western Canada by 2028 through optimization of its Mainline system.
It is currently unclear where Alberta oil will be supplied (except Trans Mountain) in the case of introduction of any restrictions and larger tariffs by the U.S. on the Canadian oil supplies to the U.S. market. At present, oil remains Canada’s most valuable export, with the country being the fourth-largest oil exporter in the world, sending around 4 million barrels per day to U.S. refineries, making up 90 percent of Canada’s oil exports.
One of the options also involves the revival of certain pipeline projects that were earlier killed by the government under Prime Minister Justin Trudeau. These include Enbridge's 525,000 b/d Northern Gateway pipeline project and TC Energy's 1.1mn b/d Energy East project, which would have allowed Canadian oil producers to bypass the US.
Still, implementation of these plans and the beginning of more active building of new pipelines may be seriously complicated by existing burdensome regulations and bureaucracy, which have long been criticized by many potential investors.
As for gas, the expansion of pipelines’ infrastructure is part of Canada’s bigger plans to become a significant supplier of liquefied natural gas (LNG), paying particular focus on supplies to some Asian states, with the estimated total export capacity of 6.26 billion cubic feet per day (Bcf/d). As part of these plans, the first phase of the LNG Canada first export terminal is expected to begin shipping 1.8 billion cubic feet of gas per day (Bcf/d).
In the meantime, the current tensions between the U.S. and Canada may pose a threat to implementation of their joint projects in the field of power generation. In general, low-cost and clean Canadian electricity can be important for such major industries as artificial intelligence, advanced manufacturing and advanced technology products. Although the U.S. generates most of its own electricity, Canadian supplies lead to lower costs across several U.S. states.
New projects, such as Hydro-Quebec’s Hertel-New York powerline, aim to further increase electricity exports by providing 20 percent of New York City’s electricity needs, saving its residents an estimated $17 billion over the next three decades. With more than 30 cross-border transmission lines linking Canadian provinces with American states, Canada is essential for ensuring cross-border grid security and a potential source for incremental generation.
In general, the two countries' energy grids remain highly interdependent. The United States and Canada exchange energy worth US$95 billion annually, and in some states, this trade represents between 5 and 15 percent of their GDP, according to research by the Center for Strategic and International Studies (CSIS).
The BBC reports that the U.S. imported 33.2 million megawatt-hours (MWh) of electricity in 2024, of which 27.2 million came from Canada and the remainder from Mexico.
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