In a rare display of federal-provincial alignment, Prime Minister Mark Carney and Alberta Premier Danielle Smith signed a significant agreement on Thursday that could pave the way for a major new oil pipeline to Canada's West Coast. The memorandum of understanding, signed in Calgary on November 27, 2025, represents a dramatic shift from the historically tense relationship between Alberta and Ottawa on energy matters.
Industry Response: Cautious Optimism Amid Skepticism
While political leaders celebrated the agreement, industry executives and analysts expressed renewed skepticism about whether companies would actually come forward to build the massive infrastructure project. The deal outlines an ambitious agenda requiring billions in private investment for a pipeline capable of carrying one million barrels of oil per day from Alberta to northern British Columbia.
Avik Dey, chief executive at Capital Power Corp., captured the optimistic perspective during remarks to a Calgary crowd: "This is what happens when governments choose growth over gridlock. When regulations support rather than restrict reliable energy development, major companies and investors know they can build."
Complex Conditions and Carbon Capture Requirements
The agreement includes several challenging conditions that industry must meet. The Pathways Alliance, a consortium of oilsands producers, would need to approve a $16-billion carbon capture and storage system. Additionally, the oilpatch faces both a strengthened industrial carbon tax and requirements to cut methane emissions by 75% over the next decade.
Despite these substantial requirements, Dean Setoguchi, chief executive of pipeline operator Keyera Corp., expressed strong support for the direction. "I like what I'm hearing from the prime minister and his office," Setoguchi said. "I'm very, very encouraged, and I give him a lot of credit, because the direction that we're going now is much more positive than what we've seen in the last decade."
Pipeline Faces Significant Hurdles
The proposed pipeline faces considerable uncertainty, including potential opposition from British Columbia and the challenging economics of mega-projects. Current pipeline operators are focusing on lower-risk projects, and analysts question whether any company would take on such a substantial long-term investment without additional incentives.
The agreement nevertheless marks a significant political achievement, bringing together traditionally opposed governments in an effort to support Canada's energy sector while addressing environmental concerns through substantial emissions reduction targets and carbon capture technology.
