A recent memorandum of understanding between the federal government and Alberta regarding a proposed bitumen pipeline has generated optimism but faces significant practical challenges before becoming reality.
The Agreement and Its Immediate Reception
On November 27, 2025, Prime Minister Mark Carney and Alberta Premier Danielle Smith signed a memorandum of understanding in Calgary for a pipeline that could transport one million barrels of bitumen daily from Alberta to Asian markets through a British Columbia port. Industry leaders and the provincial government celebrated the announcement as a breakthrough after years of federal-provincial friction.
The agreement signals rare alignment between Ottawa and Alberta, offering regulatory relief, power infrastructure commitments and carbon compliance flexibility. This cooperation has been welcomed as better than continued stalemate, with many observers suggesting it could unlock important conversations and planning for long-stalled energy projects.
Substantial Conditions and Missing Elements
Despite the optimistic reception, the memorandum represents a promise rather than a concrete plan. The fine print reveals numerous conditions that must be met before construction can proceed. The pipeline must secure approval from Indigenous communities and British Columbia, obtain private financing, deliver substantial economic benefits to B.C., and use Canadian steel.
Critically, the Pathways Alliance carbon capture project serves as a prerequisite for construction, creating additional layers of complexity. The agreement contains no committed capital, no firm timeline, and maintains existing regulatory frameworks that have previously hindered similar projects.
Global Context and Competitive Disadvantages
Canada remains an outlier among the world's top five oil producers by tying incremental pipeline capacity to costly carbon capture requirements. The United States, Saudi Arabia, Russia and China operate without similar constraints, raising questions about Canada's competitive positioning in global energy markets.
Investors require clarity, predictability and competitive frameworks before committing billions to infrastructure projects. The current agreement, while symbolically important, fails to provide the certainty needed to attract substantial private investment. Canada's oil sands, among the world's largest reserves, continue to face transportation constraints that limit their market access and economic potential.
Path Forward Requires Concrete Action
For the pipeline to progress from concept to construction, several substantive changes would be necessary. These include addressing regulatory hurdles through legislation such as Bill C-69 and Bill C-48, streamlining approval processes, and creating more favorable investment conditions.
The memorandum represents a first step in renewed federal-provincial cooperation on energy infrastructure, but substantial work remains to transform this political agreement into a viable, financed project that can actually deliver Canadian resources to international markets.
