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A new agreement between Alberta and the federal government has Saskatchewan business analysts watching closely, saying the partnership signalled a political and economic shift that could open the door to future pipeline projects.
The memorandum of understanding, signed today, outlines cooperation on methane reduction and broad collaboration on energy issues. While the document did not authorize any new projects, 980 CJME business analyst Paul Martin said its real impact was the message it sent.
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“The big picture signal here for the investment community is that Ottawa’s point of view about the way Canada operates has changed,” he said. “The new prime minister is indeed a new sheriff in town… the anti-oil approach has now been shelved.”
Martin said the last decade of climate-policy battles left investors wary of large-scale projects in Western Canada, effectively sidelining Saskatchewan and Alberta from major private-sector decisions. The MOU, he said, placed the Prairies “back on the shopping list.”
“Two days ago, we weren’t in the mix,” he said. “Now we are.”
For Saskatchewan, he said the potential benefits are clear. The province continued to produce oil but faced long-standing challenges getting its product to market. With limited access, producers often accepted lower prices than those in global markets.
“We’ve had to take lower prices because we effectively have to buy our way into the American market,” Martin said. “More outlets to more markets is good news… multiple bidders will drive up the price.”
Martin said any pipeline proposal remains years away. Still, if a project were announced within the next several years, Saskatchewan could see both construction-related work and a boost in long-term competitiveness.
Even so, significant obstacles remain, especially British Columbia’s stance on new export routes through its territory. Martin pointed to recent examples, including Nutrien’s decision to build an export terminal in the United States, as signals that companies were already exploring alternatives.
“If B.C. is not going to play the game… people are saying, ‘We’re not going to wait for you,'” he said. “That’s going to be the conversation, whether we go north, south, northeast, or straight west through Vancouver.”
He said that new attention toward Churchill, the U.S. Pacific Northwest and even Atlantic Canada showed quickly that the business environment was shifting.
Martin added that politics remained intertwined with economics, noting that the MOU marked a symbolic break from federal policies under former prime minister Justin Trudeau.
“There’s lots of politics in this thing,” he said. “It’s not just a business story.”
Deal could raise short-term costs, but raises possibility for pipeline
The recently signed MOU might end up being costly in the short run, but could bring the region closer to developing a pipeline.
That’s according to Jason Childs, economics professor at the University of Regina.
Childs told 980 CJME that the loss of the emissions cap for Alberta is good news for Alberta, but there may be a larger industrial carbon tax.
Childs said the deal could have effects that carry over into Saskatchewan as well.
“The Government of Saskatchewan has been consistently on board with this idea of another pipeline to tidewater,” he said.
“It has the potential to free up some capacity on other pipelines that we have access to. But for us, all those pipelines go to the U.S., so not a lot has changed for us in that regard.”
Childs said it would be interesting to see how much opposition B.C. will show to the potential development of a pipeline.
He described this announcement as “reasonably good-ish” news for Alberta, but said there are too many risks and unknowns to invest in a pipeline project under this framework.
“We’ve seen pipeline companies in this country invest billions of dollars to have a deal completely melt on a whim or a change of government,” Childs said.
“I’m thinking about Energy East, or some of the other projects that we saw die under the Trudeau Government. So I think, ‘Once bitten, twice shy’ might be the mantra for a lot of these companies.”
Both Prime Minister Mark Carney and Alberta Premier Danielle Smith said no pipeline could be developed without a private sector proponent.
– with files from 980 CJME’s Jacob Bamhour and Daniel Reech
