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The timing may be tight, but it appears the Canadian oilpatch will be able to keep adding production without exhausting all available pipeline space in the coming months.
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With a string of new pipeline expansions and projects progressing, it’s providing industry leaders and analysts confidence in the ability to add more egress, as was done in the early 2000s.
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It’s also a far different outlook for the sector than in the past decade, which saw several large projects derailed or stuck in regulatory and legal limbo.
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“It feels like kind of . . . back to the mid 2000s to say 2010-ish. It’s like that period again where we’re kind of on the edge of something really big,” Trans Mountain Corp. CEO Mark Maki said in an interview.
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“There’s a number of things that have to come together. Now, you go back six years . . . there were barely any chess pieces on the board or puzzle pieces,” added Bevin Wirzba, CEO of South Bow Corp. “Now, there’s a lot of pieces on the board, but they’re not all connected yet.”
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The comments, made last week at the Energy Roundtable event, capture the progress being made on the pipeline front as Canadian oil output continues to climb.
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On Friday, South Bow announced that its open season — a process to determine long-term shipper interest in the company’s proposed Prairie Connector project, which would move more barrels from Western Canada into the U.S. — was successful.
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The Calgary-based company expects to make a final investment decision on the proposed development by the middle of next year.
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Prairie Connector would use 150 kilometres of pipe already in the ground in Canada that was initially intended for the Keystone XL project, and add new pipeline to move more oil south, where the system would link up to a new U.S. project proposed by Bridger Pipeline.
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At the same time, Calgary-based Enbridge is looking to optimize its massive Mainline oil system by up to 400,000 barrels per day in two phases — adding 150,000 bpd by the end of 2027, and a second phase by the end of 2028.
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Trans Mountain Corp., which is owned by the federal government, is considering ways to increase its capacity by about 300,000 barrels per day (bpd) within the next three years.
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Trans Mountain would begin by adding drag-reducing agents that would allow up to 90,000 more bpd of oil to flow through its line — it can currently transport 890,000 bpd from the Edmonton area to Burnaby, B.C. — by the first quarter of next year.
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A second project would see new pump stations added to the system, pushing total capacity to almost 1.2 million bpd by the end of 2028.
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In the longer term, the Alberta government is also proposing a greenfield pipeline to the Pacific Coast — operating no later than 2034 — although a route and project proponent have not been announced.
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The Trans Mountain system, which can access markets in Asia, is expected to be “close to full” this month for the first time since a $34-billion expansion project was completed and began operating in 2024, Maki noted.
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A final investment decision (FID) on its new optimization initiative could be made later this year.
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“We are pre-ordering stuff. We see the economics. We see the shipper demand,” Maki said. “It’s a highly, highly likely project.”
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Consultancy S&P Global Energy has forecast that Canadian oil production is expected to increase by about 500,000 bpd above last year’s levels, exceeding 5.8 million bpd, by 2030.
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In a recent report, S&P Global estimates that effective pipeline export capacity averaged 4.9 million bpd last year, while surplus capacity averaged just over 300,000 bpd for the year.
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“By as early as the winter of 2026–27, supply could more materially overtake export pipeline capacity if existing pipeline systems are not expanded,” it noted.
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However, under its base case scenario, the extra capacity of pipeline projects already announced would accommodate Western Canada’s export volumes.
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“Putting aside some tight periods through the winter months, the system does look like it should balance,” Kevin Birn, Canadian oil markets chief analyst with S&P Global Energy, said Monday.
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“We are moving back into a period where we need those expansions to come online . . . If these things come in as advertised, the system should be able to clear and we should avoid those (wider oil price) differentials. But timing is everything when it comes to pipelines.”
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Analyst Nate Heywood of ATB Cormark Capital Markets noted higher commodity prices, due the conflict in the Middle East, are incentivizing increased oil output in Western Canada. If production exceeds pipeline capacity, it could lead to more oil moving by rail and a wider differential affecting Canadian crude prices.
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“With pipeline projects typically taking years to get into service, we are lucky right now we have these optimization projects that are very short cycle in nature,” he said. “And if the timing doesn’t line up for a couple of months, it is very temporary in nature.”
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Heywood estimates the spare capacity of oil pipelines out of Western Canada is currently between 100,000 and 150,000 bpd.
