Table of contents

• Step 1: Begin in a time of crisis
• Step 2: Get to know the region’s permafrost — and assume ‘the ground is going to move’
• Step 3: Prepare to build a pipeline above-ground — or chill the oil
• Step 4: Expect cost overruns, especially as the climate changes
• Step 5: Monitor in perpetuity. Adapt to a warming climate

“This is no picnic,” warned a somewhat cryptic job poster on the walls of an Edmonton pipeline construction firm in summer 1942.

“Men hired for this job will be required to work and live under the most extreme conditions imaginable. … Men will have to fight swamps, rivers, ice and cold. Mosquitos, flies and gnats will not only be annoying but will cause bodily harm. If you are not prepared to work under these and similar conditions — do not apply.”

The job was a secretive government project in the wilderness of the Canadian North. In less than two years, a team of 30,000 would enlist to lay a four-inch-wide steel pipe from a recently discovered oilfield near Norman Wells, N.W.T., to Whitehorse, Yukon.

The “stupendous” and “unusual” construction project, as it would be called in the years after its completion, was the first attempt to build a pipeline in the North American Arctic. 

It would ultimately lay the foundation for many decades of oil exploration in the North.

Today, a fragmented trade relationship with the United States and an oil crisis driven by a new conflict in the Middle East have bolstered Canadian politicians’ calls for new oil and gas infrastructure.

As investors hesitate to back the east-west pipeline proposals that face opposition from Indigenous communities and environmental advocates, a decades-old idea to build a link to the Port of Churchill on the shores of Hudson Bay has picked up steam.

While not all of northern Manitoba is as ice-laden as the Northwest Territories or Alaska, any pipeline from Alberta’s oilfields to Manitoba’s northern coast would need to cross the Canadian Shield, the tundra and permafrost. These ecosystems are changing rapidly as the planet warms; more than half of existing infrastructure in the Arctic is projected to incur damages by mid-century as a result of climate change. 

If Manitoba, the federal government and industry players are serious in their pursuit of pumping oil and gas through the Port of Churchill, they will need to build on the legacies — and lessons — of northern pipelines that have come before.

Step 1: Begin in a time of crisis

The first time a pipeline was strung across the hard, icy wilderness of the North American Arctic, the world was at war. 

It was the spring of 1942, just months after the attack on Pearl Harbor, and the U.S. War Department (as it was called then, too) was concerned its Arctic bases were exposed to attacks by Japanese forces. 

Behind closed doors, the U.S. government devised a plan to shore up its Arctic security with two daring infrastructure projects: a highway slicing through the ice from Dawson Creek, B.C., to Delta Junction, Alaska, and a pipeline feeding crude from the untapped Norman Wells oilfield in the Northwest Territories across the Mackenzie Mountains and on to a refinery in Whitehorse.

This secret wartime pipeline, built by the Imperial Oil Company, would be called Canol — short for Canadian oil. 

“At the time Canol was begun, our situation was not a happy one. … The sea lanes to Alaska might be blocked, and with a shortage of freighters and tankers it was imperative that an overland route to Alaska be opened up and given an assured fuel supply,” Richard Finnie, a historian and filmmaker who produced a documentary about the pipeline, said in a 1947 article in the Canadian Geographical Journal.

“All that was done, and with amazing speed.” 

It took just 22 months to lay the 1,000-kilometre pipeline; it would take just nine months to abandon it. By 1947 the war was over and the oil link was no longer needed. Canol was dismantled, its steel repurposed. 

But its short-lived presence made a permanent mark on the North.

Before Canol, Finnie said, there were no airports, no roads longer than 15 kilometres, and certainly no oil infrastructure. The project proved to governments, business and engineers that the harsh northern terrain, with its unyielding granite and ice, could be tamped down with concrete and steel. 

In the decades since, two more major pipelines have been built in the northern reaches of the continent: Enbridge’s Line 21, from Norman Wells to northwest Alberta, and the Trans-Alaska Pipeline System that cuts the length of the northernmost American state.

The Trans-Alaska pipeline, a four-foot-wide, 1,200-kilometre-long pipe that zigzags through Alaska’s mountain valleys from an oilfield at Prudhoe Bay to a marine terminal at Valdez, was also built in just two years. It had previously been stalled for several years due to legal and environmental challenges, but was ultimately approved when the 1973 Arab-Israeli war thrust America into an oil crisis.

The Trans-Alaska Pipeline System originates at a pump station on the state’s north coast, pictured here. It pumps oil to a marine port on the state’s south coast more than 1,000 kilometres away. Photo: Jenny Kane / The Associated Press

Now, a new oil crisis is renewing old interests.

Amid what the International Energy Agency called “the largest supply disruption in history,” Canada has agreed to contribute 23 million barrels to global emergency oil supply. Despite being the world’s fifth-largest producer of both crude oil and natural gas, pundits and politicians argue a lack of pipelines is stymying the country’s export capacity.

“We must build new pipelines west, east, north and south — without delay and without hesitation — to supply Asian, European and American markets with safe, reliable and responsibly produced energy products,” Alberta Premier Danielle Smith wrote in an op-ed for the Financial Post this month. 

Manitoba’s Port of Churchill is now being heralded as a potential trade hub allowing the country’s resources more rapid access to eastern markets. Momentum is building in support of an energy corridor that could carry oil, natural gas, potash or hydrogen from the Prairies to Hudson Bay. 

In January, Premier Wab Kinew announced multiple energy companies are interested in backing the proposal, while a November agreement with the federal government pledges to simplify regulatory approvals for a port expansion.

In the 2026 budget, the NDP announced a further $10 million to “keep building the momentum on this project and attract even more private sector interest in a potential energy corridor.”

Under these political conditions — and with significant investments from either the private or public sector — pipelines can be built quickly. 

“There’s just an idea that we don’t do enough in the Arctic,” Heather Exner-Pirot, director of energy, natural resources and environment at the Macdonald-Laurier Institute, said in a late February interview. Canadians periodically worry the country does not have enough presence in the Arctic, or is under-utilizing its resources, she added. 

Those fears are “based on a very superficial understanding” of the Arctic, she said. But coupled with a desire to diversify exports and opposition to an east-west pipeline through B.C. to the Pacific Ocean, they have made the prospect of a new northern pipeline more enticing.

But in reality, she said, building in the North — over Manitoba’s muskeg and permafrost — is an expensive and dangerous logistical challenge.

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Step 2: Get to know the region’s permafrost — and assume ‘the ground is going to move’

When Canol was first proposed, scientists knew so little about building infrastructure in the Arctic, they had yet to come up with a term for its characteristic, perennially frozen ground. It was Stanford University professor Siemon Muller who first coined the term permafrost after being sent to investigate where the Alaska Highway and Canol pipeline would be built.

In simplest terms, permafrost is a term for ground that remains frozen year-round, though it is formally defined as “earth materials that remain below 0 C for two or more consecutive years.”

In northern Canada, the top layer of soil, called the active layer, typically thaws briefly in the summer, but the permafrost below remains at a relatively stable freezing temperature. Photo: Weronika Murray / Pingo Canadian Landmark / The Narwhal

Permafrost is typically described as either continuous (appearing over more than 80 per cent of the ground), discontinuous (covering between 30 and 80 per cent) or sporadic (less than 30 per cent). Almost half of Canada’s land area is underlain with permafrost, predominantly across the Territories. 

While the top layer of soil, called the active layer, thaws briefly in the summer, the permafrost below remains at a relatively stable freezing temperature. Gravelly, rocky soil is often considered “ice-poor,” and is able to maintain its stability even when the ice thaws. Finer soil tends to create “ice-rich” permafrost, where frozen moisture is necessary to the structural integrity of the surface. 

Understanding these nuances is a prerequisite to designing any pipeline infrastructure in the North, University of Alaska Fairbanks geophysicist Vladimir Romanovsky said in an interview. 

“If it’s present, the second very important question is: how much ice is in that permafrost?”

Romanovsky has been working with permafrost since the mid-’70s — right around the time the Trans-Alaska pipeline was built. Understanding of permafrost was still limited then, but would grow as engineers planned a route across the Arctic. 

In January 1969, representatives from some of North America’s largest oil and gas producers and mining operations met at the University of Calgary for the third Canadian conference on permafrost, where a session was dedicated to discussing the challenges of building pipelines over the frozen ground. 

By this point, scientists understood the permafrost “is in a very delicate state of thermal equilibrium with its environment, and any disturbance will cause thawing and degradation,” T. A. Harwood, chairman of the National Research Council’s permafrost subcommittee, said in a presentation. This is further complicated by the discontinuous nature of much of Canada’s permafrost layer, he added, which makes the ice “patchy and unpredictable.” 

Understanding the ice content helps engineers assess how the permafrost will change under the temperature stresses created by a pipeline, Romanovsky said. Oil pipelines are usually transporting a heated product, while gas pipelines are often chilled. 

“Both of them impact the environment in terms of permafrost. The heated oil pipeline will thaw permafrost if it’s placed into the ground; the chilled gas may actually create new permafrost,” he said.

Approximately half of Canada is underlain by permafrost, though its characteristics (such as ice thickness and temperature) vary widely across the country. Source: Natural Resources Canada. Map: Julia-Simone Rutgers / Winnipeg Free Press and The Narwhal

When permafrost thaws, a layer of water forms under the ice, which can cause the ground to shift — a phenomenon called subsidence. The problem is exacerbated on slopes, where the soil can become oversaturated and form landslides. Newly frozen areas can swell or heave, posing infrastructure risks. 

“Permafrost, generally, is not just frozen dirt. It’s a highly sensitive, temperature-dependent foundation,” Alireza Bayat, professor of civil engineering and director of the Canadian Underground Infrastructure Innovation Centre at the University of Alberta, said in an interview.

As the active layer thaws and freezes, the changing grounds can cause pipes to either sink into the soil or be pushed up out of the ground, Bayat said.

“Essentially you’re assuming the ground is going to move. How can we build or design a pipe that’s able to handle that?”

To make a pipeline work in the discontinuous permafrost seen in northern Manitoba, Romanovsky said scientists and engineers will need to consider the extent of the ice layer and calculate the degree of cooling needed to keep the frost stable through the pipeline’s lifespan. Extra margin should be built in to account for climate change, he said, which is rapidly warming the Arctic.

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Step 3: Prepare to build a pipeline above-ground — or chill the oil

After finding a major oilfield at Prudhoe Bay, Alaska, in the 1960s, oil and gas executives were consumed with “the problem of deciding on the best means of transporting this oil to market.” 

In his presentation, Harwood suggested a couple possible routes: either straight across the permafrost to Alaska’s south shore, or through the Mackenzie River Valley. The latter seemed the more sensible option to Harwood, given the pipe could either link up with existing infrastructure in Alberta or be carried on to the Port of Churchill — which was being used for seasonal grain shipments at the time — where “it appears reasonably certain that it would be possible to ship oil … to any continental port throughout the year.”

Plans to expand northern Manitoba‘s historic Port of Churchill would mean creating an important channel between the Arctic and the rest of Canada. It could also potentially include a new pipeline from Alberta. Photo: Dylan Robertson / Winnipeg Free Press

The decision would ultimately be made to run the pipeline across Alaska, allowing easier access to western markets and fewer regulatory challenges. 

But the question of how to lay a pipeline carrying either hot, liquid oil or pressurized, cold gas was still unanswered. 

At that point “no one [had] actually constructed a pipeline in the North and operated it,” Harwood said.

He proposed three solutions: building a road with a large crown — effectively a peak in the centre — along which a pipeline could be nestled in insulating materials, laying the pipe in a trench dug into the active layer of the permafrost or suspending the pipeline above ground. 

The original design for the Trans-Alaska pipeline was drawn up by a Texas company that planned to use the same methods it had for its southern lines, Romanovsky said: “Dig a trench, put the pipe in, cover it and everything will be good.” 

“That would be a disaster if that would have happened,” he said.

The design was reviewed by Arthur Lachenbruch, a permafrost scientist at the United States Geological Survey, who determined the proposal to bury a four-foot-wide pipe the length of the state would likely thaw the surrounding permafrost.

“Where the ice content of permafrost is not high, and other conditions are favorable, thawing by the buried pipe might cause no special problems. Under adverse local conditions, however, this thawing could have significant effects on the environment, and possibly upon the security of the pipeline,” Lachenbruch wrote in a 1970 report.

Lachenbruch’s report changed everything, Romanovsky said. 

The pipeline was already facing pushback in the courts from both environmental organizations and Indigenous Alaskans. It was the first major test of the newly passed National Environmental Policy Act, and led to lengthy environmental impact assessment hearings, where critics used Lachenbruch’s report to support their case.

Construction stalled while the pipeline owner, now called the Alyeska Pipeline Service Company, was forced back to the drawing board. 

Instead of burying the line, engineers decided to suspend more than half of the 1,200-kilometre link on H-shaped support beams, a novel construction method for the time.

The 78,000 beams were each fitted with an innovative technology, called thermosyphons, designed to regulate the temperature of the permafrost.

“It’s a very smart engineering design,” Romanovsky said. 

The thermosyphons (also called thermopiles) don’t require any energy. Instead, the space-age technology consists of sealed tubes inserted several metres into the permafrost that contain a small amount of pressurized gas.

In the summer months, when the permafrost is colder than the air, the thermosyphons don’t have much work to do. But in the winter, when the temperature below ground is warmer than the atmospheric temperatures, the gas condensates into a liquid and drips to the bottom of the tube. Below ground, the liquid absorbs heat from the surrounding ice and evaporates, drawing the heat up and out to the surrounding air. 

“This convection goes on all winter long, taking heat from the ground, bringing it to the atmosphere and releasing it,” Romanovsky said.

There are currently two major oil and gas pipelines operating in the North. The Trans-Alaska Pipeline System transports oil above ground for much of its route. Enbridge’s Line 21 is buried underground, and must cool the oil that flows through it to ensure its operations don’t contribute to permafrost thaw. Source: Global Energy Monitor, Canada Energy Regulator. Map: Julia-Simone Rutgers / Winnipeg Free Press and The Narwhal

Years after the Trans-Alaska pipeline came online, Canadian oil companies returned to the idea of laying a pipe through the Mackenzie Valley, this time connecting the oilfield at Norman Wells, N.W.T., to existing infrastructure in Zama, Alta. 

Unlike the Trans-Alaska line, Enbridge’s 869-kilometre Line 21, which came online in 1985, is the first Canadian Arctic pipeline to be buried in the permafrost.

To mitigate the risk of subsidence, the Norman Wells pipeline runs cold. The oil is chilled before entering the line to mirror the average ground temperature throughout the year, averaging between 0 C and -1 C. (Oil in the Trans-Alaska line is kept between 38 C and 63 C). 

Because clearing the ground for a pipeline right-of-way removes some of the natural insulation on the permafrost, several thaw-sensitive slopes along the route were insulated with woodchips to prevent melting. Monitoring technology was installed in strategic locations to measure ground temperature, check for pipe movement and estimate thaw depths. 

The pipeline has not been without incident. 

1,500 barrels of oil spilled after the pipe failed in 2011. Two years later, the federal pipeline regulator found 77 buried lines in the region were at risk of failure; the town of Norman Wells ranked as the community with the highest number of federally regulated pipeline incidents in 2013. In 2016, the pipe was shut down for nearly two years due to risks posed by a shifting permafrost slope.

Imperial Oil plans to “wind down” operations at the Norman Wells oilfield this fall, citing declining production.

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Step 4: Expect cost overruns, especially as the climate changes

Regardless of whether the pipe is to be built above or below ground, designing and constructing infrastructure able to withstand shifting permafrost is, above all, “very expensive,” Romanovsky says. 

At the earliest stages, a feasibility study estimated the Trans-Alaska pipeline would cost between US$863 million and $1.05 billion, depending on its capacity. By 1975, after re-working the design to factor in the permafrost, the budget was $6.4 billion. 

In the end, it cost more than US$8 billion —10 times the original estimate. 

Similarly, Canol came with an initial estimate of $500 million (in 2025 CAD) but in the end cost $3.2 billion. After the war, American cabinet members criticized the project as “useless and a waste of public funds.” 

These ballooning costs are often attributed to the limited permafrost expertise during initial designs; they do not account for the additional costs of maintenance and repair.

Bayat, at the University of Alberta, said Arctic pipelines require specialized materials, design characteristics and construction methods to withstand the forces caused by moving permafrost while mitigating the pipe’s risk to the environment — all of which can be costly.

Pipeline projects are prone to cost overruns. The cost of building the Coastal GasLink pipeline, seen here cutting through northern British Columbia, ballooned from initial estimates of $6.2 billion to a final price of $14.5 billion. Experts say building a pipeline on permafrost would present unique challenges and cost risks. Photo: Matt Simmons / The Narwhal

The remote location can also add to the cost, as it leaves operators reliant on winter roads and other temporary infrastructure when building and maintaining the pipe.

“You will spend some money to keep it in good shape,” Romanovsky, at the University of Alaska, said of Arctic pipelines.  

For example, the company tries to survey the pipeline by helicopter every day, weather permitting.

When the Alaska project was being designed in the mid-’70s, Romƒanovsky said, engineers and geophysicists were concerned about how the pipeline could impact the permafrost, but few were aware of the long-term risks a warming climate could pose to the pipe itself.

In 2020, several supports holding the pipeline aloft began to bend as the permafrost slope they were attached to began to thaw and shift, threatening the integrity of the pipe and forcing the ownership group to replace the beams and refreeze the slope. The same year, flood damage cost the operators US$10 million to repair the pipeline, while preventative maintenance to safeguard sections against further flooding was expected to cost a further $10-15 million.

These expenses are expected to climb as warming accelerates permafrost thaw. 

A scientific review of research from the last 20 years estimates as much as 50 per cent of Arctic infrastructure — including the Trans-Alaska pipeline, and some Canadian highways — are at high risk of damage by 2050. Maintenance costs, the review estimates, could increase by more than $15 billion in that time, while unavoidable damages could cost upwards of $21 billion.

Manitoba has already felt the impacts of shifting permafrost on infrastructure. 

The Hudson Bay Railway, which runs more than 800 kilometres between The Pas and Churchill, was among the first major transportation projects built over Canadian permafrost. Since its construction in the late 1920s, it has required regular maintenance as the weight and heat of train traffic thaws the ice-rich permafrost over which it was built. The railway was out of service for 18 months after being washed out by floods in 2017.

Federal and provincial governments have spent upwards of $500 million to purchase, repair, maintain and upgrade the railway since 2018.

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Step 5: Monitor in perpetuity. Adapt to a warming climate

As part of the environmental agreement that greenlit the Norman Wells pipeline, Enbridge and the Canadian government collaborate on research and monitoring, which provides long-term data about the impact of pipeline infrastructure on the permafrost.

That data is among the longest permafrost monitoring records in the country. The long view of the ice helps form a picture of how permafrost is changing alongside the global climate — and trends show the ice is warming quickly, Romanovsky said.

“In places where the permafrost was warmer, it’s already started to thaw from the top down,” he said. “In the future, with further warming, it will be happening in more and more regions, and be happening faster and faster.”

A 2024 report from the Arctic Monitoring and Assessment Programme found permafrost has warmed by two to three degrees since the 1970s, as ground temperatures reach record highs. The thawing has substantial impacts on the landscape, causing erosion, slumping and pooling of water. That melting permafrost in turn releases trapped carbon dioxide, further fuelling the warming effect.

In Canada’s North, landscapes such as caribou habitat found in Yukon’s Tombstone Territorial Park, seen here, are increasingly at risk of dramatic change as permafrost melts. As permafrost melts, landscapes become more unpredictable. Photo: Jimmy Thomson / The Narwhal

The Arctic Research Consortium of the United States warns the standard 30-year climate data engineers typically use when planning infrastructure projects has become “insufficient,” as climate change speeds up. 

“In the past, pipe design was kind of static … they were based on the fact we know how the weather is or how the ground is,” Bayat said. “Those assumptions are now more dynamic and they are changing with the climate.”

These warming trends could render existing mitigation technologies like thermosyphons ineffective, Romanovsky added.

During an engineering conference in Portugal in 2008, Edmonton-based Duane DeGeer presented on the unique considerations for Arctic pipelines, reporting the success of both the Norman Wells pipeline and the buried segments of the Trans-Alaska line had “prompted pipeline designers to consider burying Arctic pipelines wherever possible.” 

To mitigate heaving and sinking, the report referred to research on thicker, stronger, better insulated pipes, as well as controlling the temperature of materials inside, varying burial depth and soil cover and, above all, conducting long-term monitoring of soil temperatures and pipeline integrity. 

According to Bayat, more resilient materials, better temperature control methods, as well as more advanced monitoring technology, have become more accessible over time. 

Engineers now use a “strain-based design” philosophy that accounts for the inevitable ground movement caused by permafrost, and plans for pipes that can withstand those forces, he said. Construction practices have also evolved, with directional drilling (an underground tunnelling technique) replacing the traditional open-trench methods.

Major strides have been made in monitoring technology, he added, with fibre optic sensors, digital inspections and predictive analytics that “allow us to have more eyes on those pipes and be more proactive than reactive.” 

Ultimately, Bayat said, building a new pipeline in the North will come with many unknowns.

“This is not the area [where] we go and build pipes every day. … When it comes to the North, yes we have examples, but only a few, and they’re from the past,” he said. 

“These foundations are rapidly changing. What will the pace of that change be? How much further is it going to change? Those are the things that need to be taken into account.”

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Julia-Simone Rutgers is a reporter covering environmental issues in Manitoba. Her position is part of a partnership between The Narwhal and the Winnipeg Free Press.

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The marine town of Churchill, Man., cherished for its wildlife, landscapes and history, has recently taken on a new sense of national importance. Plans to expand Canada’s lone deepwater Arctic port on the shores of Hudson Bay have gained momentum — and investment — in the last year as the country looks north for solutions to an unprecedented conflict with its southern neighbours. 

Premier Wab Kinew has pitched the Port of Churchill as an answer to Canada’s trade concerns, and a means of galvanizing both provincial and national economies. Prime Minister Mark Carney has designated a plan to upgrade the port facilities as “transformative,” committing millions in federal dollars to the project and touting its merits in meetings with European trade partners. In late January, Kinew announced the province was in talks with several companies, including at least one major energy company, about investing in port expansion.

“I think a few of those companies are starting to say that they’re very serious about making an investment in Manitoba,” Kinew said in an interview earlier this month. “That would lead to infrastructure being built to do more export on Hudson Bay, which would be huge for our provincial economy.”

The Port of Churchill Plus proposal envisions a new resource corridor capable of transporting Western Canada’s natural resources, including liquefied natural gas, oil, mineral ores, potash, fertilizer and agricultural products, to Hudson Bay, where they can be shipped to international markets. 

It would likely include an upgraded northern railway, an all-season road, year-round shipping routes and a fossil fuel pipeline.

Pipe dreams: decoding the political debate on shipping oil through Manitoba’s Arctic port

This is far from the first time the near-century-old port has garnered attention from politicians keen to see it reach its potential as an international trade hub. But where several attempts to grow the capacity of the historic grain port fizzled out, this latest proposal is gaining steam.  

Federal and provincial governments have already committed more than $500 million combined for infrastructure upgrades and preliminary research. A study to gauge industry interest in the project is underway, as is a study of the operational requirements to allow for year-round traffic in Hudson Bay. Manitoba has inked a memorandum of understanding with Alberta, Saskatchewan, British Columbia and the territories to collaborate on “nation-building infrastructure” and a west-to-east economic corridor. 

Past efforts to expand the port and diversify its trade potential were hampered by a lack of public and private investment. The remote location, difficult terrain and short ice-free shipping season make the port and associated Hudson Bay Railway particularly expensive.

A ship prepares to be loaded with grain at the Port of Churchill in 1978. The port opened in 1931 to offer a northern grain transport route for farmers in the Prairies. Photo: Bob Lowery / Winnipeg Free Press

“It wasn’t seen as a priority,” Barry Prentice, professor of supply chain management at the University of Manitoba, says in an interview. 

But threats to Canada’s Arctic sovereignty and tariffs from its largest trade partner have “stirred up the pot a bit,” he says. At the same time, new technologies and the realities of a rapidly changing northern climate have created opportunities to improve the economics of an Arctic trade route.

“The stars are kind of aligning so that Churchill again becomes a viable and maybe very attractive route,” Prentice says.

While experts are divided on whether the plans for a northern Manitoba resource corridor will come to fruition this time around, they agree the Arctic is changing — and it’s possible for Churchill to take on a more robust role in national trade.

From a ‘neglected port’ to a new vision for Churchill

When Arctic Gateway Group, a consortium of 29 First Nations, 12 local governments and corporate investors, purchased the port and the Hudson Bay Railway from its former American owners in 2018, the “neglected” infrastructure was in disrepair, president and chief executive officer Chris Avery says.

The railway washed out in 2017, cutting off communities in Manitoba and Nunavut that relied on the line for supplies and transportation. The rail line’s foundation was sinking in the muskeg, culverts were blocked, rail ties hadn’t been replaced. The port itself had rotting timber, exposed rebar and sinkholes in the wharf deck, Avery says. It had been shuttered in 2016. 

Led by Churchill Mayor Mike Spence and several northern Indigenous communities, Arctic Gateway Group thought: “Enough is enough. We need to take back control of this asset that communities are dependent on, and by the way, even the country is dependent on,” Avery explains.

Chris Avery, chief executive officer of Arctic Gateway Group, which purchased the Port of Churchill in 2018, says the group’s goal in developing the port is to support Canada’s efforts to diversify trade, assert northern sovereignty and advance Indigenous economic reconciliation. Photo: Mike Deal / Winnipeg Free Press

The group secured government funding to repair and upgrade the existing infrastructure. Under the new ownership, port activity resumed: grain and northern supply shipments restarted in 2019 and the first critical mineral shipments in more than 20 years set sail in 2024. 

Momentum for the port swelled the following year, in the wake of U.S. President Donald Trump’s threats of Canadian annexation and skyrocketing tariffs. Canadian leaders stressed a need to strengthen Arctic sovereignty and open new avenues for trade; Kinew turned to the opportunity presented by the northern port.

“The whole [situation] with Trump and the U.S. has changed a lot of our thinking about the economy,” Kinew said last spring. “We’ve got minerals, we’ve got oil and gas. We’ve got all sorts of great goods that we want to export.”

During a meeting between premiers and Carney in June to pitch nation-building projects for a first-of-its-kind Major Projects Office, Kinew said a trade corridor to Hudson Bay could include a pipeline to carry Canadian oil and gas products, hydrogen, potash or other natural resources. 

And now Port of Churchill Plus has landed on the Major Projects Office’s list of transformative strategies, announced in September. 

Avery says the consortium’s vision is to support Canada’s efforts to diversify trade, assert northern sovereignty and advance Indigenous economic reconciliation by becoming “a major port.” 

To get there, it will need four significant pieces of infrastructure.

The existing railway needs to be upgraded to class one standards, meaning it can carry rail cars with a maximum weight of almost 130,000 kilograms. While that’s only about a seven per cent increase compared to current weight limits, “our customers tell us that seven per cent makes a big difference.” 

On top of rail, Churchill will need all-season road access to allow shippers and customers easier access to the port, with the added benefit of linking several northern communities that currently rely on an increasingly unpredictable winter-road network. Churchill, 1,000 kilometres north of Winnipeg, is only accessible by rail or plane. The provincial highway network currently ends near Gillam, Man., almost 300 kilometres southwest of the port town.

Any development of the Port of Churchill will require all-season road access, as the site and town, 1,000 kilometres north of Winnipeg, are currently only accessible via plane and rail. Many northern communities currentlyrely on unpredictable winter roads. Photo: Dylan Robertson / Winnipeg Free Press

The port itself will need to accommodate year-round shipping, Avery says. Right now, it’s operational for about four months per year when the ice cover on Hudson Bay is at a minimum. Due to climate impacts, that’s expected to change in the coming decades, but Churchill will need icebreakers in the meantime. 

Finally, to capitalize on “the No. 1 Canadian export, which is energy products,” Avery says Manitoba will need a way to get those products to northern tidewater. While the company acknowledges oil and gas products can be shipped by rail (the port already transports diesel and other fuels as part of its northern re-supply shipments), he says “everything is being considered, including pipelines.” 

At least two companies have proposed pipeline routes from Alberta’s oilsands to Hudson Bay.

NeeStaNan, a Manitoba and Alberta-based company with First Nations owners, has proposed a “utility corridor” to Port Nelson, Man., a site 300 kilometres southeast of Churchill, that would be capable of exporting liquefied natural gas. The company’s website says it has secured support from two Canadian natural gas producers and is exploring the feasibility of exporting liquefied natural gas (LNG) via a facility at the mouth of the Nelson River. 

The other, an Alberta-based organization called Western Energy Corridor, proposes developing a link between Churchill and Western Canada that could contain “one or more combinations of a natural gas transmission system, an oil pipeline or a high-voltage electric transmission system.” The company’s website states it has mapped out a 1,560-kilometre corridor and drafted documents for initial regulatory filing.

Is a fossil fuel pipeline really feasible in the north?

Past proposals to pipe Alberta oil to Manitoba’s northern coast have failed. According to Heather Exner-Pirot, director of energy, natural resources and environment at the Macdonald-Laurier Institute, that’s at least in part because: “The economics of a seasonal port are terrible.”

“The question isn’t: ‘Has a pipeline ever been built this far north?’ ” she says. “The question is: ‘Can you put this infrastructure in a seasonal port and still get a return, still attract investment and still attract shippers — does it make economic sense?’ ”

As of right now, Exner-Pirot says, the answer is no. 

What makes Churchill unique isn’t just that the port is in deep Arctic waters. Similar ports exist in Alaska, Greenland, Norway and Russia. But those are located in places with year-round access to open water, she says; Hudson Bay, by comparison, is covered in ice about seven months per year. 

Typically, these part-time ports are used for what Exner-Pirot calls destination shipping. Goods are shipped in and out of a specific location like a community or a mine over the course of a much shorter shipping season. 

“It’s more expensive, it’s logistically constrained and people can only sell … or receive their goods for a few months a year,” she says.

Exner-Pirot says there is “absolutely not” an economic case for building an oil or gas pipeline to Churchill, where the shipping season is about four or five months long.

“If you build an oil pipeline over 1,000 kilometres, you better be using it every day,” she says.

A map depicting the approximate location of all federally regulated oil and gas pipelines in Western Canada. Provincially regulated pipelines are not depicted. Source: Canada Energy Regulator. Map: Julia-Simone Rutgers / The Narwhal and Winnipeg Free Press

Pipelines take decades to build and cost billions; they also face significant regulatory hurdles and often staunch opposition from Indigenous communities, environmental advocates and residents. Liquefaction facilities for natural gas, which Kinew has floated as a possibility for Churchill, aren’t cheap either — a recently completed facility in Kitimat, B.C., cost $18 billion.

Opposition to pipeline development, alongside Impact Assessment legislation that empowers the federal government to review the environmental, social and economic impacts of major projects, has created conditions where “an interprovincial pipeline in Canada has borne an unacceptable political risk,” Exner-Pirot says.

“Pipelines are built every single day. We invest billions of dollars into pipelines every single year,” Exner-Pirot says. “It’s the … pipelines that have to cross either a provincial border or an international border that are the problem.”

Manitoba’s premier has already faced criticism for his recent support of new oil and gas infrastructure to Churchill. Former NDP vice-president Chris Wiebe told the Free Press the proposal was a reversal from the party’s “no new pipelines” stance during the election campaign, while Clayton Thomas-Müller, an author and environmentalist from Mathias Colomb Cree Nation, called the proposal “jarring and triggering” in The Globe and Mail.

Experts say it’s not economically feasible to build an oil or gas pipeline to Churchill, Man., as the Hudson Bay port is inactive for several months of the year due to sea ice cover. Pipelines take years to build, are expensive and, like the Coastal GasLink pipeline in northern B.C. shown above, often face dedicated resistance from Indigenous communities. Photo: Matt Simmons / The Narwhal

Exner-Pirot believes funds to upgrade the Port of Churchill could be better spent on other, year-round rail and port infrastructure. The Port of Vancouver is in need of investment, she says, adding exporters in Prince Rupert, B.C., only have one class of rail line capable of carrying the heaviest loads. 

“Everyone is just begging the government to fix the West Coast port issues and they’re spending half of their political attention on Churchill,” she says. “It’s very frustrating.”

Developing a resource corridor through the tundra comes with additional costly challenges. The shifting muskeg and permafrost — increasingly unpredictable due to a rapidly changing climate — makes infrastructure more expensive to maintain. 

But University of Manitoba’s Prentice says these challenges aren’t insurmountable.

“They built an oil pipeline across Alaska, above ground, and it still functions,” he says. “I don’t think it’s something that the pipeline industry is incapable of doing again, it’s just a matter of the costs and whether you have an investor willing to do it.”

The Arctic is changing — so is Arctic shipping

For many, the most compelling argument for a more robust trade network through the Arctic is that climate change will open up shipping routes as sea ice melts.

Arctic Gateway Group is working with University of Manitoba researchers to better understand how the ice is changing and what impacts it will have on shipping. 

“The preliminary results of their study tell us that with climate change, the sea lanes can be open for six months of the year already … without any icebreakers or new types of equipment,” Avery says. “By the end of the century, or within the lifetime of our kids, the sea lanes will be open on a year-round basis for commercial shipping.”

Feiyue Wang, director of the Churchill Marine Observatory and one of the professors involved in the research, says the ice-free period in Hudson Bay gets about one day longer every year, based on observed ice cover between 1979 and 2025. That trajectory will likely accelerate in the latter half of the century, he says.

“Even at this moment, the shipping window is already much longer than the current operational window at the Port of Churchill,” Wang says.

Feiyue Wang, director of the Churchill Marine Observatory and a University of Manitoba professor involved in research on the Port of Churchill expansion, says climate change is already melting sea ice and lengthening the harbour’s operational period. Photos: Ruth Bonneville / Winnipeg Free Press

Shipping is picking up, according to a report from Protection of the Arctic Marine Environment, an Arctic council working group. More ships passed through the Arctic polar code area in 2025 than in any of the last 12 years, with the number of unique ships increasing 40 per cent over that time.

While most were fishing vessels, nearly 200 boats carrying oil, oil products, gas or chemicals passed through the region last year — again 40 per cent more than in 2013.

Mining has prompted some of the shipping increase, the report notes. Bulk carriers, which carry cargo like mining ore, sailed 156 per cent more nautical miles in the Arctic last year than in 2013. Natural gas vessels were unheard of in Arctic waters in 2014, but as of 2025, there were 40 unique gas tankers in the North sailing more than 866,000 nautical miles combined.

But “just because the bay is ice-free, doesn’t mean it’s navigable,” Wang says.

Shipping routes through the Arctic require a continuous ice-free pathway. While much of Hudson Bay is covered by “first-year ice,” which forms in the winter and melts in the summer, multi-year ice in the high Arctic could float south and complicate pathways through the Northwest Passage. Ice conditions will likely be highly variable based on weather and climatic conditions, Wang says.

That means Canada will continue to need icebreakers to navigate the Arctic. 

More shipping increases risk of a spill. Researchers warn it could be devastating

With more tankers carrying oil and gas through the remote and extreme Arctic waters, the risk of an oil spill becomes harder to ignore. 

While part of Wang’s research has focused on understanding the changes to the shipping season as a result of climate change, he’s particularly passionate about another aspect of the marine observatory’s work: “How would you actually develop that shipping in a way that is not only economically viable, but environmentally sustainable and culturally appropriate?”

In the case of small leaks in warmer climes, the ocean is full of microorganisms that can quickly absorb oil and clean up a spill. 

“What really concerns us is if you have a moderate, or even worse, a major oil spill … how can we actually clean that up?” Wang says.

Typically, spills are recovered either by burning oil off the water, which gets rid of the majority of a spill but produces a potentially toxic smoke, or by dispersing the oil into the smallest droplets possible, which allows the contaminants to quickly flow into the “much larger volume of the ocean” and be absorbed and diluted by natural processes.

But those methods are designed for warmer oceans. “We know very little about how those will work out in a system like Hudson Bay,” Wang says.

The remote and dangerous nature of the Arctic, with its poor visibility, long hours of darkness and a maze of sea ice to navigate would likely mean a longer wait for cleanup to begin. Freezing temperatures slow the work of the ocean’s natural oil scrubbers, meaning spills would take longer to decompose. More concerning: existing cleanup plans assume an ice-free surface. If oil becomes trapped under the ice, it may be impossible to find and remove. 

“If you have an oil spill, the best time window to respond is right away,” Wang says. 

The longer oil is left to spread with the fast-moving currents, “more profound damage to the marine ecosystem” may occur.

In the case of a large spill, impacts on local ecosystems and communities could be devastating. Vegetation and animal life could be contaminated, damaging Indigenous food sources. Local fisheries and tourism industries would likely be affected too, with far-reaching economic consequences. Communities exposed to contaminants may also face human health risks.

Major oil spills pose risks to local ecosystems and communities, including to animals in the affected area. Polar bears are a staple figure in Manitoba’s north and could be impacted if an oil spill were to occur in Hudson Bay and at the Port of Churchill. Photos: Ruth Bonneville (left); Dylan Robertson (right) / Winnipeg Free Press

“I’m obviously in favour of fossil fuel development, but I’m not in favour of doing it in the most expensive, most dangerous way possible,” Exner-Pirot, at the Macdonald-Laurier Institute, says.

But from Wang’s perspective: “Just because there’s a risk of an oil spill does not mean we should not have increased shipping, right? Just because there’s always the risk of a car crashing does not mean that we should not drive on the highway.”

Wang believes the technology and tools to respond to an ecological emergency can — and will — be developed. Crucially, he says, they will need to be developed in partnership with Indigenous communities who have extensive Traditional Knowledge of the marine environment. 

Ideally, he says, governments will invest in not only the technology to detect and respond to spills in the Arctic, but also in training local communities to lead response efforts. 

‘Generational opportunities’ in Churchill: Arctic Gateway Group

Wang has worked closely with Indigenous communities around Churchill and in the Kivalliq region of Nunavut for over a decade. Overwhelmingly, he says, these communities want to see developments that improve career opportunities, living conditions and access to health and education — but only if those developments put the community’s interests front and centre.

“That’s where this environmental piece, to me, is the most important one,” Wang says. “Everyone is talking about this Port of Churchill Plus project as a potential nation-building project, but if the environmental aspect and the Indigenous aspect … are not addressed properly, I don’t think this project is going to go anywhere.” 

Manitoba’s leaders are taking a similar approach. In December, Kinew announced the Port of Churchill Plus project will be led by a new Crown-Indigenous Corporation, a first-of-its-kind leadership structure that will bring government representatives and Indigenous leaders together to guide development. The corporation is expected to be formally established in March. 

During a recent visit to Churchill to meet with community members and stakeholders to discuss the future of the port, Kinew joined federal representatives to announce $250,000 to study the feasibility of a marine conservation area in Hudson Bay. 

‘Never been more urgent’: new conservation area in Canada’s North inches closer to reality 

“When we’re talking about pursuing export and import along Hudson Bay, we can’t do that without thinking about the environment,” Kinew said during the announcement.

“Instead of just trying to build up some massive export terminal and then wait … to highlight the downsides years in the future, we’re saying let’s have that conversation now.”

In a subsequent interview, Kinew said Churchill residents expressed both excitement about the port’s potential and some concern about the environmental impacts. The resource corridor he envisions could include a pipeline, a transmission line, an all-weather road and an LNG terminal, but he cautions “that’s just one potential avenue.” 

“Likely, to make a big project work in Hudson Bay, it’s going to be a mix of products. You probably have critical minerals, agricultural products, manufactured goods, northern re-supply for Nunavut all working together there,” he said.

At Arctic Gateway Group, Avery says the company is already in talks with companies that produce many of these commodities, including critical minerals like nickel and copper, potash and silica sand and agricultural products. The communities that own the port and rail “want to see a balance,” he says. 

“They want to make sure that where they live is protected, but they also want to see generational opportunities for themselves, their kids and their grandkids.”

Julia-Simone Rutgers is a reporter covering environmental issues in Manitoba. Her position is part of a partnership between The Narwhal and the Winnipeg Free Press.

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Let’s face it: there’s been a lot of talk lately about building more pipelines in Canada. So we thought we’d rewind a bit: what’s the state of Canada’s existing pipelines? Why are we in this “build, build, build” moment? And what might more pipes mean for Canada’s pledge of net-zero emissions by 2050? 

I spoke with climate investigations reporter Carl Meyer and Prairies reporter Drew Anderson for this explainer video, and dove into the dizzying data available online to try and make sense of the over 800,000 kilometres of pipes covering the country.

Want to make sure you don’t miss our latest videos? Subscribe to our channel on YouTube and follow us on TikTok. 

Thanks for watching!

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The B.C. government has just approved the Ksi Lisims liquefied natural gas (LNG) export facility, which will produce up to 12 million tonnes of LNG annually by 2028. 

Ksi Lisims LNG — pronounced s’lisims, meaning “from the Nass River” in the Nisg̱a’a language — is a joint venture involving the Nisga’a Lisims Government, Canadian natural gas consortium Rockies LNG and Western LNG, a U.S.-based LNG project developer. 

Located at the north end of Pearse Island, close to the Alaska border, the facility will be the second largest LNG producer in B.C., nearly matching the 14-million-tonne production capacity of the first phase of the LNG Canada export terminal, which began shipping LNG to Asia this year. 

In their reasons for decision, posted publicly on Sept. 15, B.C. ministers of environment and energy, Tamara Davidson and Adrian Dix, said they were approving the new LNG project despite not receiving consent from nearly half of the First Nations who participated in the environmental assessment process.

“We recognize that LNG facilities, along with natural gas pipelines, electrical transmission lines … and other development in the area has deeply affected Indigenous communities and ways of life, and that Ksi Lisims LNG will contribute to the cumulative effects on ecosystems and communities in the region,” they wrote.

However, they concluded the Ksi Lisims project would “constitute economic reconciliation and an exercise of self-determination for Nisga’a Nation” and provide “direct and indirect economic opportunities for First Nations in the region and for British Columbia.”

The Coastal GasLink project, a 670-kilometre natural gas pipeline built to supply LNG Canada, experienced numerous problems during its construction, impacting several First Nations along its route. Photo: Matt Simmons / The Narwhal

LNG exported from Ksi Lisims will primarily be sent overseas to countries like Japan and South Korea, where the gas will be burned to produce heat and electricity.

In approving the project, the ministers noted Ksi Lisims will be bound to 23 conditions, including a greenhouse gas emissions plan in line with B.C.’s net-zero policy. However, they noted the project is expected to have “significant adverse effects on greenhouse gas (GHG) emissions from the use of natural gas-fired power barges used to electrify the project prior to connection to the BC Hydro electrical grid.” It is unclear how or when the project would be electrified.

Canada calls this newly approved LNG project green. For now, it will run on fossil fuels

Western LNG and the Nisga’a government also own Prince Rupert Gas Transmission (PRGT), an 800-kilometre natural gas pipeline that will cross more than 1,000 waterways on its route to supply Ksi Lisims LNG. The pipeline was greenlit by the province’s environmental assessment office in June, paving the way for construction to continue this summer, more than a decade after the project was first proposed. 

The Prince Rupert Gas Transmission pipeline is slated to transport fracked gas from B.C.’s northeast to the Ksi Lisims LNG export facility on the Pacific coast near the Alaska border. Map: Shawn Parkinson / The Narwhal

“Ksi Lisims LNG represents a transformational opportunity for all participating B.C. nations, and it will be developed in line with our nation’s high environmental standards,” Eva Clayton, president of the Nisga’a government said in a statement. “This is what reconciliation looks like: a modern Treaty Nation once on the sidelines of our economy, now leading a project that will help write the next chapter of a stronger, more resilient Canada.”

B.C.’s newest pipeline conflict, explained

Some First Nations consulted on Ksi Lisims LNG did not give consent

For the Nisg̱a’a, Ksi Lisims is a development opportunity that will benefit Nisga’a communities, the province and the Canadian economy, but other First Nations oppose the project. 

The Lax Kw’alaams band, for example, says the LNG facility would negatively affect its traditional territory and has expressed concerns about the project’s potential impact on B.C.’s ability to meet its climate targets. Lax Kw’alaams is southwest of the newly approved LNG facility and tankers filled with the liquefied gas will pass by the village regularly.

The environmental assessment office announced earlier this month that it had concluded dispute resolution processes initiated by Lax Kw’alaams and the Metlakatla First Nation as part of Ksi Lisims’ environmental assessment — despite failing to address the First Nations’ concerns about the project’s potential impacts on their communities.

The project also faced a legal challenge filed by the Gitanyow Hereditary Chiefs in October 2024. The chiefs submitted an application for judicial review to the B.C. Supreme Court, alleging B.C.’s environmental assessment office failed in its duty to consult and is negligent in its obligations to protect fish species when it concluded the project does not pose a threat to Nass River salmon populations.

Gitanyow community members rely on Nass salmon and are concerned the project will negatively impact populations. Photo: Ryan Dickie / The Narwhal

“This project threatens our food security and government has denied Gitanyow a role in decision making,” Simogyet (Hereditary Chief) Malii Glen Williams said in a statement at the time.

The challenge was rejected by the court in early September. 

Naxginkw Tara Marsden, Wilp Sustainability director with the Gitanyow Hereditary Chiefs, said the approval puts B.C. on a dangerous path. 

“It’s hard to believe that we’re moving ahead in B.C. with climate-destroying LNG projects in the midst of a climate crisis,” Naxginkw said in a statement provided to The Narwhal. “Greenlighting LNG projects is part of a trend in the wrong direction.”

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While Canada continues to wrestle with an existential threat posed by the guy in charge of the country next door (I’m talking President Donald Trump, not Elon Musk, but swap the names as you see fit), it’s not the only game in town. 

In Alberta, as the premier tries to fend off allegations of a potentially explosive corruption scandal, the province is pumping out news releases on everything from irrigation repairs (maybe good?) to funding for energy conservation and emissions reductions (devil’s in the details). There’s also a new Alberta Energy Regulator CEO who has a lot of experience regulating working in the industry. 

Oh, and hunting. There’s always hunting. Why is there always hunting? Because there’s always hunting. 

Let’s dive in, shall we?

From regulated to regulator

Is industry capable of self-regulation? What about industry insiders running semi-independent regulators? It’s an ongoing question across industries, but it’s particularly acute in Alberta’s oil patch. Knowledge of the industry is one thing, but the Alberta Energy Regulator isn’t mucking around with nuance, however, appointing a long-time oil and gas executive to lead the organization. (Six of the seven directors on the regulator’s board, which made the appointment, just happen to also be oil and gas insiders.)

On Thursday, the regulator said Rob Morgan would take the reins starting on Feb. 18, replacing Laurie Pushor. Pushor said last August that he wouldn’t renew his contract.

Morgan helped build Strathcona Resources into the fifth-largest oil producer in the country during his seven-year term as chief executive. He retired in October. 

According to The Globe and Mail, Morgan doesn’t have a plan to tackle the ever-present problem of inactive wells that will cost at least tens of billions of dollars to clean up, but he’ll chat with staff and stakeholders.

According to the energy regulator he will soon lead, Morgan’s former company has 513 inactive wells — 31 per cent of all its wells that haven’t been capped and sealed or reclaimed. 

Makes sense he hasn’t considered the issue. 

Trump makes our oil pump

I’m working on this on Valentine’s Day, so you’ll forgive me if my mind is full of romantic visions. Beavers and geese embracing one another across a frozen tundra, inflamed by nationalistic fervor to create an unholy Canadian beast that shall seek its vengeance upon those without our natural wealth. 

It’s obvious from this photo that the photographer should run. Now imagine that same goose, hissing with a mouthful of beaver teeth. Terrifying. Photo: Lars Hagberg / The Canadian Press

Regardless, the cross-provincial love fest continues to heat up in the face of an existential threat from the guy who is purportedly leading the United States at the moment (I think it’s actually Elon Musk’s small child, named X Æ A-Xii, but we can debate that later). 

Even old frenemies Alberta and Quebec have been hit by Cupid’s arrow. Quebec Premier François Legault told Politico he spoke with the Alberta premier on Feb. 12 about pipelines while the two joined their provincial and territorial colleagues for a big old peer-pressure session at the White House that didn’t go so great.Legault said that although Quebeckers are pro-environment, the, uh, environment has changed with Trump (or X Æ A-Xii) in charge. 

“What I said is we need social acceptability. We didn’t have it the last time we had a project but it may change in the future because people are very unhappy about Mr. Trump and they see that if we want to get this oil and gas out of Canada, you have to go through Quebec to export to Europe,” he said. 

I think we should call the new Canadian beast the Beagoose. Maybe Goover. I’m open to suggestions, but I think I’ve set the bar pretty high. 

Whatever it’s called, it will hiss. No debate. 

Water water everywhere but not a drop to drink

The Alberta government, which is absolutely not trying to draw attention away from allegations of a more than half-billion-dollar corruption scandal with plenty of funding announcements, announced it was continuing with a program it had already announced and allocated funding for in the last budget. 

Irrigation can seem like a fairly harmless enterprise that only helps bring water to crops, but the practice is under increased scrutiny in the midst of a multi-year drought, with irrigation being the biggest water user.

That said, there are some elements of the plan that could help conserve water by preventing evaporation, replacing open channels with buried pipelines. 

With Alberta in the midst of a multi-year drought, water is top of mind for many in the province. Irrigation consumes vast amounts of water, which has drawn more scrutiny in dry years. The Alberta government re-announced its funding for irrigation projects last week for some reason. Photo: Aaron Vincent Elkaim / The Narwhal

I guess the government just wanted you to know it’s still spending that money it’s spending, for some reason. 

The government also announced the latest round of energy efficiency projects that will be partially funded through its industrial carbon tax.

Unlike a previous announcement, which focused on helping oil and gas companies improve drilling, this one appears focused on efficiency and emissions, which to the government means using drones to plant trees and “developing concentrated milk products” that can be transported more easily.I don’t know, man. I don’t make the news, I just report it. 

Did you think we wouldn’t mention hunting? 

Last week felt weird, mostly just because the minister of forestry and parks, Todd Loewen, didn’t have an event promoting hunting.

It looked like the despair might continue this week, but fortunately I have a keen news sense and clicked on the news release entitled “Utah auction set to support conservation work in Alberta.”

These sheep don’t know it, but one of them could be worth a lot of money. Alberta’s minister of forestry and parks has been travelling frequently to promote hunting in the province, particularly auctions of special licenses. Photo: Mike Graeme / The Narwhal

You see, the conservation work is the work done by hunting organizations that are funded by hunting fees. 

Loewen has been hyping this auction with the zeal of man with a giant clock around his neck, so this is the culmination of a lot of work. He’ll be in Salt Lake City from Feb. 13 to 17 to attend the Western Hunting and Conservation Expo, which includes an auction of special licences to hunt elk, mule deer, moose, pronghorn, cougar, whitetail deer and turkey.

Alberta quietly opens cougar hunting in provincial park

According to the province, these types of licences raised more than $1.2 million. A recent auction of a bighorn sheep licence went for a record $400,000. 

By the time the mounted head of the sheep crosses over the border, it should cost the hunter approximately $9 trillion due to a cascading avalanche of tariffs, counter-tariffs and thin-skinned recriminations.

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The town of St. Paul, Alta., is the kind of place where you can buy a basket of homemade preserves and local beef jerky from the Chamber of Commerce on Main Street. It’s a farming community at heart, surrounded by fields and gently rolling hills. It’s not huge, just under 6,000 people, and the biggest tourist attraction is the world’s first UFO landing pad, which attracts “an average of 20 people per day,” according to the local newspaper.

“It’s not the centre of the universe,” Amil Shapka says with a smile. He’s a retired dentist who describes himself as being “born here, raised here, went to school here, left for the big city, hated it, came back and lived happily ever after.” 

Shapka lives not far from town down a gravel road. It’s “me and the bears and the squirrels,” he says. “Being Ukrainian, there’s a bit of the thousands of generations of farmers in me. Our connection — my connection — to the land is part of my well being.”

Amil Shapka was born and raised in St. Paul, Alta. He was surprised to learn a $16.5-billion carbon capture pipeline is planned through his community — not far from his home, and his garden where he grows much of his own food.

But against this backdrop, change is afloat. 

If everything goes according to plan, the town will soon be part of one of the world’s largest carbon capture and storage networks. A $16.5-billion megaproject — much of which could be taxpayer money — is in the works from Pathways Alliance, a group of the six largest oilsands companies. Advocates say carbon capture is a high-tech antidote to the global climate crisis and a solution to reduce heat-trapping emissions created by producing and burning fossil fuels. Critics say it is untested, expensive and not feasible at scale. 

Here in northeastern Alberta, Pathways Alliance seeks a proving ground.

Pathways Alliance, a group of the six largest oilsands companies, is planning to build a 400-kilometre pipeline to transport carbon dioxide from the oilsands to a yet-to-be-determined underground storage area in northeastern Alberta.

The consortium is planning to build a 400-kilometre pipeline as wide as 36 inches (a little under a metre) to carry carbon pollution from the oilsands. Liquid carbon dioxide will be buried deep under the Earth’s surface, injected into the sandstone that lies more than a kilometre underground. Huge swaths of the province — thousands of square kilometres — are part of what are called evaluation agreements — contracts with the Alberta government that grant a company the right to conduct testing, including drilling wells and injecting substances deep underground, to find good places to store carbon pollution. 

Canadian Natural Resources Limited, a Pathways member, has an evaluation agreement that blankets St. Paul and the surrounding region. Pathways Alliance filed an application for the pipeline to the Alberta Energy Regulator in March — the first step in the approval process.

The proposed pipeline route will pass near this field, southeast of the town of St. Paul, Alta. Residents are concerned about risks to groundwater and the possibility of leaks or explosions.

This worries some local residents, who are concerned groundwater is at risk and that an explosion or a leak could mean asphyxiation caused by odourless, invisible carbon dioxide. They wonder who will respond in the event of an emergency — will it be the local volunteer fire department? Will leaking carbon dioxide interfere with the oxygen-dependent engines of emergency vehicles? Some First Nations are concerned about implications for Treaty Rights and the ability to hunt, trap or fish. Athabasca Chipewyan Chief Allan Adam has asked the provincial regulator to require an environmental assessment of the project “to ensure the rights of [Athabasca Chipewyan First Nation] are protected.”

For others, a new pipeline is good news for the economy and could bring good jobs to the region. Will the project pit neighbour against neighbour? And, crucially, many wonder, will it even work?

“This isn’t really even proven technology. They’re going to roll the dice using billions of public dollars and potentially put our future, property values and access to water at risk,” Shapka says. “Does this serve the public interest?”

In an Alberta community familiar with oil and gas, carbon capture is ‘something totally different’

Penny Fox grew up in Ontario, married a “farm boy” and moved to Alberta in 1987. “If we were millionaires, we’d be farming,” she says with a laugh. As it is, they both have other careers — her in small business development, him in government — and live on a small farm just south of St. Paul where in their free time they sell hay, work in the vegetable garden and add to their sizeable collection of firewood. 

St. Paul resident Penny Fox is looking for answers about the Pathways Alliance carbon capture project. Where exactly will the carbon pollution be pumped underground? How big of an area will it impact? Answers, she says, have been few and far between.

Fox has lived in various parts of Alberta and is familiar with the impacts of oil and gas development. After all, the province already has more than 400,000 kilometres of pipelines criss-crossing under the surface. “We all depend on it,” she says, acknowledging the economic impact of the industry in Alberta and across Canada.

But when she heard a carbon dioxide pipeline was planned across the road from her house, she had a lot of questions. This, she says, doesn’t feel the same as an oil or natural gas pipeline. Although those also come with risks, they have what she views as a reasonable framework for regulation.

Fox and her husband collect rainwater for their garden and rely on a well for their drinking water. They recently received a notice that they are “adjacent landowners” to the proposed route of the 400-kilometre pipeline to carry carbon pollution form the oilsands to an underground location nearby.

“This is something totally different,” Fox says. She’s a member of a grassroots group that formed, as “farmer called farmer, neighbour called neighbour” when representatives of the project — called land agents — started knocking on doors in the region. 

It started with Shapka, who sprung into action when he heard about the land agent seeking access to a neighbour’s property in exchange for a cheque. He rented the local community hall and started making phone calls. 

Fox, Shapka and other community members call themselves the “No to CO2” group. Part of their mission, Fox says, is to get access to the project details — information is scarce, especially since Pathways Alliance scrubbed its website in response to new federal greenwashing regulations — and to understand the risks of the project to the people who live nearby. The alliance did not respond to The Narwhal’s multiple requests for an interview, nor to a list of detailed questions about the project.

Residents of the St. Paul area had no idea about the Pathways Alliance plan until land agents started knocking on their doors and the doors of their neighbours, offering a payout in exchange for agreeing to the pipeline crossing their property.

“What we were trying to do is not tell people what to do, but give them enough information for them to understand what it means,” Fox says. “We need to ask questions so that we can clearly understand what this is.”

“What happens if the North Saskatchewan gets polluted?” she asks, referring to the major river that flows just north of the community and on to Saskatchewan. “How many communities — how many people — rely on that for a water source? Because, I mean, it’s not just Alberta. It’s not just an Alberta problem.” 

“They should be able to answer those questions.”

Carbon plan could create 15,000 jobs during construction: Pathways Alliance

Some people in St. Paul are excited about the potential benefits of the project — they see it as a major investment in Alberta’s future. Bernie Poitras is one of them. He was a rodeo announcer who worked in the oilpatch before he became the District 12 commander of the Otipemisiwak Métis Government, formerly the Metis Nation of Alberta, last fall. 

Poitras’ family has been in the area ever since his great-grandfather came to Alberta in 1874 from Manitoba. He still finds time to be an announcer at local hockey games, but much of Poitras’ time is now taken up with politics — and that means talking about the carbon pipeline Pathways wants to build through the region. “It is very complicated,” he says over coffee at the local A&W.

Bernie Poitras sees the potential for jobs and investment in the community during the pipeline construction.

“It’s going to employ a lot, a lot, of people,” Poitras says. Many in the community look forward to either joining construction crews themselves, or earning the money the workers spend on restaurants, hotels and other services. 

In a briefing report submitted to a House Committee focused on the environment, Pathways said its project would create “15,000 to 20,000 high-paying jobs during construction, with approximately 1,000 permanent jobs post-construction,” adding it would “stimulate the provincial and national economy.”

Rural areas of Alberta, including small communities like Myrnam, just south of St. Paul, could potentially benefit from the money spent by pipeline construction crews. Pathways Alliance estimates the project could create up to 20,000 jobs during construction.

Not only that: some see it as an opportunity to be part of a solution to global warming. International organizations like the Intergovernmental Panel on Climate Change and the International Energy Agency say carbon storage is part of a viable path to net-zero emissions — and needs to be expanded rapidly to have an impact. 

Poitras was recently at the Lloydminster Heavy Oil Show, where Pathways Alliance sponsored a fireside chat. There, after talking to people in the industry, he was reassured about the technology. “I don’t really think it’s gonna affect the groundwater,” he says. “It’s not an oil line, it’s a carbon capture line, and it’s going deep underground.”

From groundwater to asphyxiation, northeastern Alberta residents weigh risks 

Not everyone is so sure. Fox, Shapka and others are concerned about myriad other potential risks. Sure, the worst might not happen. But, they wonder, what happens if it does?

Agreements for where the pipeline will run will be determined by landowners, who will receive a cheque in exchange for access to their land. “The landowner is the only one that has a say, because they they can stop it from coming across,” Fox says. That can lead to tension. “Some are prospering from it, and others are going to pay the price for it,” Shapka adds.

When carbon pollution is injected deep underground there are two options: one, it can be used for what’s known as “enhanced oil recovery” — in essence, injecting carbon dioxide into a well so you can get at more oil. A 2022 report found nearly three-quarters of captured carbon pollution around the world is used to extract more oil which, as critics point out, leads to more profit and more carbon pollution. There are more than 8,000 kilometres of carbon dioxide pipelines in the United States, “virtually all” of which are used for enhanced oil recovery, according to the U.S. Congressional Budget Office, which says of 15 carbon capture storage projects in the country as of December 2023, 13 are for enhanced oil recovery.

The second option is for carbon pollution to be “permanently stored” deep underground.

“This is waste disposal,” Shapka says. “This is an industrial byproduct and calling it storage, I think, minimizes what it really is. That stuff’s going to be pumped down there in perpetuity.”

That raises questions, among which concerns for groundwater are prominent. “Water is number one,” Shapka says. 

“Water is number one,” Shapka says. He grows a large vegetable garden and is proud of the food his community is able to grow — something he worries could be threatened if the carbon dioxide pipeline goes ahead.

He’s not alone in his concerns. In Australia, the Queensland government recently announced it would prevent the storage of carbon pollution under a 1,700,000-square-kilometre area of the state. Farmers had pushed for the ban, noting an environmental assessment found carbon storage would “likely cause an irreversible or long-term change in water quality” if carbon pollution were to migrate through the region’s aquifer, spreading contaminants such as lead and arsenic.

The Alberta Energy Regulator, which is responsible for evaluating the Pathways Alliance application, said ensuring carbon dioxide doesn’t migrate into groundwater is a “critical focus area” and that it requires companies “to review the area geology to ensure a high level of confidence” to ensure that. It also requires a hazard and risk assessment be conducted and that all risks are “fully mitigated” before the project will be approved. 

“All carbon dioxide storage projects require a monitoring, measurement and verification plan, to outline how the company will ensure the pollution stays put, and what “remedial actions [will] be taken if anything does go wrong.”

But the possibility something will go wrong remains, which is why several groups are asking for an environmental assessment. In response to emailed questions from The Narwhal, a spokesperson for the Alberta Energy Regulator noted the project does not automatically trigger a provincial environmental assessment (like, say, an oilsands mine or a large hydro dam). If the regulator decides an assessment is not needed, the spokesperson said, the risks associated with the project will be evaluated under the standard application process. 

The spokesperson for the regulator said leaks of carbon dioxide from a pipeline “may briefly” turn surface water into ice “but it would not impact groundwater.” According to the regulator, carbon dioxide doesn’t present risks for groundwater when it’s in a pipeline and the risks exist only when it’s buried deep underground.

A Pathways Alliance land agent told Fox there would be test wells around injection sites — the spots where carbon pollution is buried — to check for leaks or changes to the water, but that doesn’t reassure everyone.

At the heart of it, there is an underlying skepticism of an expensive new technology being touted around the world as a solution to a local problem — right under the homes and farms of people whose families have lived here for generations. 

Several First Nations in the region, including Heart Lake First Nation, Beaver Lake Cree Nation, Whitefish Lake First Nation, Kehewin Cree Nation, Frog Lake First Nation, Cold Lake First Nations and Onion Lake Cree Nation, have also been asking questions about the project. Some have expressed concern about their abilities to exercise their Treaty Rights. (None of these nations responded to requests for an interview.)

“We don’t know how pumping carbon underground will affect our lakes, our rivers — even our underground reservoirs,” Michael Lameman, a councillor at Beaver Lake Cree Nation, told CBC earlier this year. (Lameman did not respond to a request for an interview.)

Pathways Alliance has provided a high-level map of the proposed project, but not enough information about specifics, according to Moronkeji (Kg) Banjoko, government relations and consultation coordinator with the Athabasca Chipewyan First Nation’s Department of Dene Lands and Resource Management. “There is no information about what the project will do — as a whole and cumulatively with other industrial development in the area — to the environment, local communities and [Athabasca Chipewyan First Nation’s] Treaty Rights,” Banjoko wrote in an email to The Narwhal.

The exact pipeline route is not yet set but landowners have been receiving notifications that Pathways Alliance is seeking use of their land. Map: Shawn Parkinson / The Narwhal

The nation has a number of concerns, Banjoko said, including “the addition of another pipeline to the landscape which will cross the Athabasca River in multiple places as well as other watercourses, cause construction impacts, destroy animal habitat and create easier sightlines for hunters and predators to hunt caribou and moose.” Athabasca Chipewyan First Nation would like Pathways Alliance to support an Indigenous-led assessment of the project — or, failing that, to request a joint provincial-federal environmental impact assessment. 

Carbon capture and storage “allows [Pathways] to talk a big game about action on climate change before they have committed any serious resources to building the project and reducing emissions — all while continuing to produce record amounts of oil,” Banjoko added.

Past carbon dioxide pipeline explosion in the U.S. likened to a ‘zombie apocalypse’

Ever-present concerns about a leak, or worse, an explosion, aren’t unfounded. 

In 2020, a 24-inch (0.6-metre) carbon dioxide pipeline in Mississippi — in the tiny town of Satartia, population 50 — ruptured after a mudslide. More than 31,000 barrels — nearly 5,000,000 litres — of carbon dioxide were released. Within minutes, there were reports of people having seizures or falling unconscious. The carbon dioxide “immediately began to vaporize,” according to a federal Department of Transportation investigation, and spread across the county. 

At least 45 people were hospitalized and hundreds were evacuated. “It looked like you were going through the zombie apocalypse,” the county’s emergency director told NPR in 2023, adding that people were laying on the ground, shaking and unable to breathe. The company behind the pipeline took two hours to tell the relevant authorities about the explosion (it has since paid nearly US$3 million in fines). Some residents said they spent more than an hour unconscious in a vehicle filled with carbon dioxide and had to have supplemental oxygen for months after the incident. 

In April of this year, another carbon dioxide pipeline ruptured in Louisiana. In September, carbon dioxide leaked from an injection well in Illinois. 

Carbon dioxide pipelines are not new — they crisscross North America, mostly for enhanced oil recovery. In the last 10 years, according to an analysis from the Great Plains Institute, there have been 63 instances of leaks or accidents. Since 1994, carbon dioxide pipeline accidents have released approximately 135,000 barrels — which amounts to more than 21 million litres — in the United States. 

According to the Intergovernmental Panel on Climate Change, “there is no indication that problems for carbon dioxide pipelines are any more challenging than those set by hydrocarbon pipelines.” That said, they may be more subject to what are known as “longitudinal running fractures” — a rapid and catastrophic unzipping, or splitting, of a pipeline — than other gas pipelines and need adequate safety features in place.

This leads to many questions, including about emergency response vehicles, which have combustion engines that need oxygen to run, and can fail when heavier carbon dioxide displaces it.

“I don’t know what’s going on,” NPR reported a 911 caller said when the Satartia explosion happened. “My car stopped, it won’t move.”

In a rural community dependent on a volunteer fire department, the risk of a pipeline explosion — and the corresponding possibility for asphyxiation — has residents worried about their safety. So far, their questions about emergency preparedness have not been answered.

That pipeline was just over 1.5 kilometres from the small Mississippi town. In St. Paul, it is not yet exactly clear where the pipeline could run, but early plans suggest it could be a little more than a kilometre from the eastern edge of town. A spokesperson for the Alberta Energy Regulator said by email that any carbon dioxide pipeline licensed by the regulator is required to have a corporate emergency response plan.

“I don’t want to be next to that thing if that pipeline ruptures,” Shapka says, pulling apart a fresh apple muffin. “My roots are here, and everything familiar is here. But I’d really have to question that.”

Pathways Alliance says its technology is ‘safe, proven and reliable’

The potential impacts of the Pathways Alliance carbon pipeline and storage plan are being talked about at kitchen tables along the proposed route. Meanwhile, its potential benefits are being touted around the world, including at the annual United Nations meeting about climate change. 

The problem is real: there is just too much pollution. Nearly 50,000 megatonnes of carbon pollution are emitted globally each year. Around the world, “human activities have raised the atmosphere’s carbon dioxide content by 50 per cent in less than 200 years,” according to the National Aeronautics and Space Administration (NASA). 

In Canada, 677 megatonnes were emitted in 2021. Two weeks ago, the federal government announced plans to introduce draft legislation to cap emissions from the oil and gas industry, something industry leaders oppose. Instead, they and other proponents say capture and storage projects are crucial to reducing carbon pollution and mitigating climate change in the immediate future. 

The Pathways Alliance plan for the $16-billion project aims to bury 10 to 12 megatonnes of carbon dioxide deep underground each year. That’s approximately one-eighth of reported carbon pollution from the Alberta oilsands annually, or roughly equivalent to the carbon pollution emitted by the oilsands every six weeks.

The Pathways Alliance plan aims to bury 10 to 12 megatonnes of carbon dioxide annually, roughly equivalent to the carbon pollution emitted by the oilsands every six weeks.

Pathways, whose six members control 95 per cent of oilsands production, says it wants to “produce some of the cleanest barrels of oil in the world” and to be net zero by 2050. Carbon capture, it says, is “safe, proven and reliable.”

But that promise comes with caveats, especially if you ask David Schlissel at the U.S.-based Institute for Energy Economics and Financial Analysis. He’s been following carbon capture closely since 2007 and is concerned that the endeavour is more “hype” than evidence — not to mention the price tag. 

“There’s no evidence that it will capture 90 to 95 per cent of the carbon dioxide it’s designed to capture,” Schlissel says, noting data shows real-world carbon capture rates range from 10 to 78 per cent. When the whole life cycle of carbon capture efforts, which also release carbon pollution, are taken into account, he says, “it’s unlikely to have a major dent in greenhouse gas emissions.”

Pathways Alliance companies have invested billions in projects that will expand their production by tens of thousands of barrels per day over the next few years, according to the Pembina Institute, which emphasized that 2023 was a banner year for Canadian oilsands companies, which earned their second-highest year of profits in the last decade.

Carbon capture is an attempt at gaining “social licence” for continued production of fossil fuels, according to the U. S. House of Representatives’ central investigative committee, which is among critics saying the promise of a tech fix relieves pressure to pivot to energy sources that produce less carbon pollution. Global oil production is at record levels in 2024, according to the International Energy Agency, and 2023 was a banner year for oilsands profits.

Both the federal government and the Alberta government have proven eager to financially support the oil industry’s carbon capture plans. 

Carbon capture is “a tool in the toolbox” of reducing carbon pollution, according to Matt Dreis, a senior analyst with the Pembina Institute’s oil and gas program.

Governments are investing billions into carbon capture in the Prairies. Here’s what you need to know

“Carbon capture and storage is going to be a big part of emissions reductions in Alberta,” Dreis says. “It’s one of the largest opportunities to reduce emissions from [the Alberta oilsands] sector specifically.”

But critics have balked at the cost — and the amount that could be subsidized by taxpayers. Behind the scenes, Pathways Alliance has been lobbying for tax breaks and incentives from governments, including an “assurance” from the federal government that no part of the project would require a federal review under the beleaguered Impact Assessment Act. 

The potential liability for Canadians doesn’t stop there. In Alberta, the government assumes liability for a carbon capture project after it is officially certified as complete: it asks companies to pay into a “stewardship fund” to cover or offset costs, but otherwise maintenance, monitoring and leaks are the government’s responsibility. In other provinces, like Manitoba, companies will retain responsibility for costs related to leaks or repair.

In Alberta, once a carbon capture project is complete, the liability is transferred from the company to the Alberta government. That puts the government on the hook for future monitoring, as well as for any leaks.

“Make them financially responsible,” Schlissel says of future risks of leaks. “Let them put their money where their mouth is.”

Schlissel, who is 77, is curious if his doubts will be proven wrong. “I’ve asked one of my younger colleagues [to] do a seance in 30 years and let me know how it comes out,” he says with a rueful laugh. 

‘Just not convinced’: Alberta residents have lingering questions about carbon capture

At her home just south of St. Paul, where she has lived with her husband for the past 14 years, Fox surveys her garden and its late season bounty — tomatoes, pumpkins and some corn that survived a recent bear visit. She gestures across the road, where the pipeline is set to be. 

Right now, it’s just a field.

If the Pathways Alliance plan goes ahead, the fields across the road from Penny Fox’s home could be dug up to make way for the 400-kilometre pipeline from the oilsands. She wonders what’s in it for her community. “Fort McMurray is getting a definite advantage from the oilsands,” she says. “What’s the advantage here?”

“They were in Dubai, they were in Calgary and Texas and they’re all over the world,” she says of the places Pathways Alliance representatives have publicly extolled the virtues of their carbon capture plan. But, she says, “They’ve spent about three hours here.”

That leaves many in the community feeling neglected — and undervalued. Is their farming community something of a guinea pig? If something goes wrong, are they a sacrifice zone for a solution to a much bigger problem?

Fox and others worry they are unwillingly living alongside a proving ground for a technology may not accomplish what it claims it will.

Fox is well aware of the global conversation about carbon pollution and the high stakes for the planet — as well as for fossil fuel companies. “They’re being forced into coming up with a solution around carbon dioxide,” she says. “We’re just not convinced this is it.”

“I’m just not convinced all of this money and all this work is going to make a tinker’s damn of a difference.”

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A Canadian government-owned energy company is defending paying over $32 million to a controversial global consulting firm to help it save money on the Trans Mountain pipeline expansion project, which was already billions of dollars over budget.

U.S.-based McKinsey & Company won the hefty contract — singled out in a recent federal audit — without any competition in October 2022. A spokesperson for the Trans Mountain company told The Narwhal it paid McKinsey the money to reduce costs and improve productivity.

McKinsey accepted the contract despite also doing consulting work for at least three oil companies that pay tolls to ship fuels on Trans Mountain infrastructure and are currently involved in a legal dispute with the pipeline operator over its proposal to increase rates.

The cost of the Trans Mountain pipeline expansion project — which ballooned from $5.4 billion to $34 billion between 2013 and 2024 — has generated significant criticism. Environmental groups have framed the project as a massive subsidy for the fossil fuel industry that runs counter to Canada’s international climate change goals and commitments.

When Trans Mountain’s previous owner, Texas-based Kinder Morgan, proposed the pipeline expansion in 2013, it estimated it would cost $5.4 billion. By 2024, the Canadian government owned the project, and costs had ballooned to over $34 billion as the pipeline went into service. Photo: Jesse Winter / The Narwhal

Meanwhile, a group of oil companies have demanded more information about the escalating costs and objected to proposed toll increases meant to cover some of the overruns. 

If producers don’t pay substantially higher tolls to use the pipeline, it could leave Canadian taxpayers holding the bag — for as much as $18.8 billion, according to recent research by the Winnipeg-based International Institute for Sustainable Development.

What is the Trans Mountain pipeline — and why should I care?

Suncor, Cenovus and Canadian Natural Resources Limited are among the companies protesting the prospect of higher tolls. All three are on a list of McKinsey clients disclosed by the firm in unrelated court proceedings in the U.S. None responded to The Narwhal’s requests for comment.

Negar Haghighat, a consultant who advises clients about ethics and governance, said she believes Trans Mountain should have sought advice from another firm to avoid any appearance of a conflict of interest.

“There’s no reason why [McKinsey consultants] were the only option to help them with their cost reduction efforts and ideas,” she told The Narwhal in an interview. “They could have easily gone to someone who didn’t have any conflicts, perceived or otherwise.”

She added that it wasn’t a sound business practice to award the contract without any competition.

“Whether you’re buying printer paper or whether you’re looking at a multimillion-dollar consulting agreement, one way or another, you don’t want it to go out without a proper evaluation of who could do the best job for the best price,” she said.

Auditor General said Trans Mountain skipped open competition with McKinsey contract

Trans Mountain’s 2022 contract with McKinsey was among hundreds of millions of dollars worth of deals between Canada and the consulting firm that came under scrutiny in a June federal audit, which noted how public servants often failed to screen for conflicts of interest. The audit also questioned whether some of the contracts were actually needed or delivered value for money.

Canada’s auditor general said Trans Mountain skipped an open competition on the contract without clear justification, contrary to its own procurement policies.

A McKinsey spokesperson said the firm has a policy of disclosing conflicts of interest, but did not directly answer when asked if the company had disclosed any conflicts prior to accepting the Trans Mountain contract. 

“McKinsey & Company, consistent with our policies, proactively discloses both perceived and actual conflicts and follows strict protocols and have these policies to ensure we have followed the law,” spokesperson Alley Adams told The Narwhal in an email. The consulting firm previously told The Narwhal it disclosed conflicts in relation to another contract highlighted in the audit — $1.35 million to give the federal government advice about clean technology policies. That contract was awarded by the Canada Development Investment Corporation, a Crown corporation that owns Trans Mountain.

“With respect to your other questions, we would direct you to Trans Mountain for further comment,” McKinsey said about the pipeline consulting contract.

Trans Mountain declined to comment on whether McKinsey disclosed any potential conflicts or whether it was aware the firm was also representing fossil fuel clients disputing its proposed toll increases.

“Trans Mountain cannot comment on McKinsey business,” its email reply to The Narwhal said. “Please reach out to McKinsey directly for questions.”

In regards to its own staff, the pipeline operator said it was unaware of conflicts between any Trans Mountain director or officer and McKinsey.

But Trans Mountain said it agreed with the auditor general’s recommendation that it needed to improve its procurement policies to proactively search for potential conflicts.

Trans Mountain said McKinsey helped save hundreds of millions of dollars

The Canadian government purchased the existing Trans Mountain pipeline and other assets from Texas-based energy company Kinder Morgan for $4.5 billion in 2017. At the time, Kinder Morgan was threatening to cancel the project due to public opposition. Prime Minister Justin Trudeau’s government said it needed to buy the assets to ensure the completion of the pipeline expansion, which started operations earlier this year and allows oil producers in Western Canada to export more crude oil to the Pacific Coast and markets in Asia.

Trans Mountain was under fire over the mounting costs of its pipeline expansion project in 2022 shortly before it brought in McKinsey to help. A few months earlier, CBC News reported costs had ballooned to $21.4 billion, up from the previous estimate of $12.6 billion.

Although the final price tag is likely above $34 billion, Trans Mountain told The Narwhal advice from McKinsey helped save hundreds of millions of dollars, including in specific segments of the pipeline going through mountainous terrain such as Spread 3/4A in the Rocky Mountains and North Thompson region of B.C.

McKinsey has operated in Canada and globally for decades, offering advice to businesses and governments alike. It has also found itself in the middle of scandals, such as one over its role advising Purdue Pharma about its OxyContin painkiller. McKinsey reached a US$573-million settlement with attorneys general from across the U.S. as a result of its actions. At the time, the company said it deeply regretted not adequately acknowledging the tragic consequences of the epidemic, saying it was hoping to be part of the solution to the crisis going forward.

After this article was published, Adams emailed The Narwhal to say that the Trans Mountain contract was signed with McKinsey & Company Canada, which has headquarters in Toronto.

Trans Mountain selected McKinsey & Company for the consulting contract in October 2022, a few months after the Canadian government-owned energy company came under fire for cost overruns on its pipeline expansion project. Federal officials awarded the contract without any open competition. Photo: Jesse Winter / The Narwhal

When asked whether its own staff and executives could have recommended ways to reduce project costs, Trans Mountain said its own employees initiated some of the measures that led to cost savings. The external consultants, it said, helped save significantly more than three times what Trans Mountain spent on the McKinsey contract.

“McKinsey advised of hundreds of cost and productivity initiatives that were logged over the course of the program,” Trans Mountain said in a statement to The Narwhal. “Executives and managers could have, and did, devise many of the cost savings, however, facilitation and analysis by a consultant allowed us to maximize our benefits.”

Every Canadian household on the hook for up to $1,225 to cover Trans Mountain costs: report

Research published this month by the International Institute for Sustainable Development notes that even Trans Mountain’s current proposal to hike tolls won’t ensure oil companies, instead of taxpayers, are paying for the pipeline. 

The report was written by Thomas Gunton, a professor of resource and environmental planning at Simon Fraser University and a former senior official in the B.C. and Manitoba governments. He told The Narwhal the current hike proposal still isn’t high enough to cover the true costs of shipping oil. 

“Burdening Canadian taxpayers with the cost of providing a large subsidy to the oil sector to cover transportation costs is … contrary to basic principles of public equity,” his report reads. 

Unless Trans Mountain significantly increases the tolls charged to oil companies, the report says, cost overruns on the pipeline could result in Canadian taxpayers shelling out up to $18.8 billion in fossil fuel subsidies. This would be equivalent to every Canadian household paying up to $1,255 to subsidize pipeline use for oil companies that earn billions of dollars in profits.

Updated Sept. 25, 2024, at 4:10 p.m. ET: This article was updated to add a new comment from McKinsey about how its Canadian operations have headquarters in Toronto.

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The province waited nine days last spring before alerting the public of potential structural risks to the main gas pipeline that serves Winnipeg, internal government records reveal.

Departmental emails, obtained via freedom of information request, show Imperial Oil informed Manitoba officials on March 8 it would be shutting down Winnipeg’s primary fuel pipeline for “required maintenance.” Coordinated statements from provincial staff and Imperial Oil were not released to the public until the evening of March 17.

In a March 8 email to the deputy minister of Economic Development, Investment, Trade and Natural Resources, department staff said Imperial Oil had requested a same-day briefing.

“This lady [from Imperial Oil government relations] called this morning and made it sound fairly urgent that her and her team brief you today,” a staff member wrote in an email to deputy minister Dana Rudy. 

Imperial Oil suspended the use of Winnipeg’s primary fuel pipeline after discovering concerns with its structural integrity. Photo: Mikaela MacKenzie / Winnipeg Free Press

The Winnipeg Products Pipeline — the sole diesel, gasoline and jet fuel supply line for Winnipeg and parts of northern Ontario — was shut down from March until late June due to safety concerns flagged by the Alberta-based owner, Imperial Oil, along a section of pipe that runs under the Red River near St. Adolphe, south of Winnipeg. 

“This time was used to determine the potential impact of the shutdown on supply and to judiciously mitigate the possibility of panic purchasing and a supply crunch,” a spokesperson for the Manitoba government said in an emailed response to questions.

Fuel was transported by truck and rail in the interim. Several gas stations navigated shortages in the early days of the repairs; some ran out of gas altogether. 

The government’s handling of the Imperial pipeline saga has raised questions for legal experts about transparency and oversight. “The right to access information around the environment should be a universal right,” Alan Andrews, a Vancouver-based environmental lawyer working with the environmental charity Ecojustice, said in an interview earlier this summer. 

“Transparency is really critical to an effective inspection regime.”

Manitoba government pipeline inspectors had seen job cuts, staffing issues: docs

A spokesperson for the Manitoba government said by email that when it was notified of the pipeline concerns on March 8, Imperial Oil said the pipeline would be cleared for repair by March 16. “During this time, the province worked closely with all fuel suppliers and distributors to identify alternate means of transporting fuel and to ensure that supply would be met with as little impact to the consumer as possible,” the spokesperson said.

The spokesperson did not specifically answer questions about when government inspectors arrived on site, saying “provincial inspectors, as well as Imperial staff, were on site to confirm that no spillage occurred during this time. On average, both petroleum and environmental provincial inspectors were on site multiple times a week throughout the shutdown.”

The department was understaffed at the time the shutdown was announced, documents show. 

In an email intended to help update Manitoba’s premier on provincial pipeline regulations and inspection staffing levels, Jeff Kraynyk, the assistant deputy minister for the minerals, petroleum and geoscience branch, explained inspection staff had been cut from five full-time positions to four in 2021 and two positions had been largely vacant since 2022. 

In an interview earlier this summer, Manitoba Environment Minister Tracy Schmidt said the Imperial Oil incident “really highlighted some of the gaps, perhaps, in governmental oversight,” adding the department had been “decimated” by cuts under the previous government. 

Millions of litres spilled and not a single fine: 16 years in a little-known Canadian oilpatch

As a result, she said, environmental inspections across the province — be it oil and gas or otherwise — were reduced by half.  

Few government inspections of Winnipeg Products Pipeline, with oversight largely left to Imperial Oil

As staff circulated a March 13 internal briefing note outlining Imperial’s plan to replace 1,500 feet of pipeline for “preventative repair,” members of Schmidt’s team were looking for information on the inspection and repair history of the pipeline.

In an email to a member of Schmidt’s staff, Kraynyk said provincial inspectors were on site for repairs to other sections of the pipeline in 2022 and 2016. The company had completed two inspections of its own, using surveying equipment to “assess the thickness, pittings, obstructions, asymmetrical anomalies, etc.,” along the length of the pipeline in 2023.

An analysis by The Narwhal and the Winnipeg Free Press revealed government inspectors conduct few formal, documented inspections. Staff informally visit and inspect oil and gas infrastructure, but there are no records of these inspections.

According to a provincial spokesperson, there were a total of 13 formal inspections for all 5,000 kilometres of active pipelines and flowlines in the last five years. 

Instead, Manitoba relies on the oil industry to conduct its own monitoring, inspections and remediation. Those activities are documented for the province through annual reports. 

Falling behind: oversight ‘gaps’ for 5,000 km of pipeline in Canada’s little-known oilpatch

Transparency is critical to effective monitoring — both between the regulator and industry and with the public, according to Andrews, the lawyer with Ecojustice. 

“The risk of this self-regulation model is that industry has no real incentive for being transparent and owning up to their mistakes,” Andrews said in an interview earlier this summer.

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Even though Trans Mountain recently estimated the wildfire risk to its pipeline running through Jasper National Park is “low,” crews were fighting to protect it in this week’s wildfires in the park.

“Canadian wildfire reaches Jasper, firefighters battle to protect oil pipeline,” said a Reuters headline.

Parks Canada confirmed in a social media post on Wednesday evening it is protecting “critical infrastructure” from the out-of-control wildfire. It listed examples such as the town’s hospital, wastewater treatment facility and parts of Trans Mountain, a 1,150-kilometre pipeline system that transports both crude oil and refined petroleum products from Edmonton to refineries and export terminals on the B.C. and Washington State coasts. The portion that runs through the park was twinned in 2008.

The recently twinned Trans Mountain pipeline runs 1,150 kilometres and transports both crude oil and refined petroleum products from Edmonton to refineries and export terminals on the West Coast. Photo: Jesse Winter / The Narwhal

“Structural firefighters remain in the town and are working to save as many structures as possible, and to protect critical infrastructure. … Firefighters are en route to the town of Jasper as we speak,” Pierre Martel, director of the national fire management program at Parks Canada, said in a wildfire update on Thursday afternoon. Officials did not provide details on how many resources were used to protect the Trans Mountain pipeline.

Deciding which fires to fight, how many resources to put toward them or what to prioritize depends on what are known as the “values at risk.” Homes, businesses and campgrounds are all values, as is infrastructure, including oil and gas infrastructure. 

Parks Canada did not respond to emails and calls from The Narwhal by publication time.

Trans Mountain, purchased by the federal government in 2018, put out a statement on its website on Thursday saying the pipeline is still operational.

Because the Trans Mountain pipeline is largely underground, experts and the company say wildfires pose a low risk, though wildfire officials noted they were prioritizing its protection as part of their efforts to protect critical infrastructure as the Jasper wildfire burned. Photo: Jesse Winter / The Narwhal

“We continue to work with the Town of Jasper and Jasper National Park to safely monitor the pipeline. At this time there is no indication of damage to our infrastructure, and the pipelines continue to operate safely,” the statement read.

“To ensure we are supporting local emergency services, we are using our own firefighting equipment that was placed in Jasper and bringing in water to supply our equipment and continue to deploy our sprinkler system to protect our facilities,” the statement also said.

Wildfire risks ‘low’ for pipeline in Jasper: Trans Mountain report

Trans Mountain maintains that wildfire risks to its pipeline, which was first built in 1951, remain low.

According to the corporation’s 2023 environmental, social and governance report, the pipeline was rated on a zero to 10 risk scale, with 10 being the lowest risk. The length of the pipeline running through Jasper National Park was rated an eight for wildfire risks, indicating a low risk.

“Our pipeline is buried, therefore the potential impact to our assets from wildfires or forest fires is relatively low across the full route,” the report said.

What is the Trans Mountain pipeline — and why should I care?

It also noted, “We protect our above-ground assets (storage terminals and pump stations) through procedures, training, detailed wildfire response planning and by maintaining an inventory of response equipment.”

It was unclear why the pipeline was prioritized for protection when the overall wildfire risk to the pipeline was rated as low.

Trans Mountain declined an interview with The Narwhal and instead provided a link to its Thursday statement. 

Can a wildfire affect a pipeline buried underground?

While the Trans Mountain Pipeline is buried underground, some academics suggest there are still wildfire risks.

A study published in 2018 suggests the bitumen that flows through oil and gas pipelines is highly flammable and may have dangerous environmental impacts if ignited by a wildfire. This is because of diluent — used to dilute bitumen so it can flow easily through pipelines — and natural gas used to heat the bitumen at oilsands facilities and generate power at plants.

“Both the natural gas and diluent can pose high risks if exposed to fire, though the pipes carrying them are usually buried underground,” researchers wrote.

However, according to pipeline expert Ron Hugo, the risks are still fairly low.

Hugo, a professor at the University of Calgary’s Schulich School of Engineering, said wildfires heat the soil around the pipeline, transferring heat to the bitumen inside. But the temperature rise would likely be negligible, he said in an interview. 

Climate change and fire suppression have exacerbated wildfire risks in Western Canada, as was made clear by a record-breaking year for wildfires in 2023. The Jasper wildfire (not pictured here) is thought to be among the largest the park has experienced. Photo: Jesse Winter / The Narwhal

The pipeline is not an oxygen-rich environment, making explosions unlikely, he added.

“I don’t think it would be much of a concern,” Hugo told The Narwhal. “The fire is moving so quickly that the temperature rise below the surface is very, very small. And by very, very small it means it will be hard to measure.”

Though the pipeline itself is buried, some infrastructure is above ground, including pump stations — facilities that increase the pressure and flow rate in the pipeline. There is at least one pump station in Jasper. Sections of the pipe that could not be buried, say to cross a river, may also be above ground.

Hugo said above-ground infrastructure, like pump stations, has protections such as large yards free from flammable organic materials.

“All of those things, including assessing and protecting infrastructure, makes [the above-ground infrastructure] low-risk,” he said.

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Erin O’Toole’s Conservative Party is proposing to amend Canada’s Criminal Code to stop protests that disrupt key infrastructure such as pipelines or railways — a federal election proposal that many say will unfairly target Indigenous land defenders. 

The proposal is repeated twice in the party’s 160-page platform released Tuesday. It appears once in a section on energy and again in a section about public safety. The paragraph proposes passing the “Critical Infrastructure Protection Act to prevent people from blocking key infrastructure” by amending Canada’s Criminal Code to offer more severe punishment to demonstrators.

The proposal mentions the 2020 pipeline and railway demonstrations that occurred in opposition to the construction of the Coastal GasLink pipeline through the Wetʼsuwetʼen First Nation territory in British Columbia, land that is unceded. It notes these events “demonstrated the importance — and vulnerability — of the infrastructure that ties our country again.” Under the proposed Conservative law, protesters could be punished “by either summary conviction of indictment, depending upon the severity of the crime.”

“Peaceful protest is a fundamental right in Canada, but respect for the rule of law means that illegal blockades that shut down critical infrastructure, threaten access to vital supplies, or endanger lives cannot be tolerated,” the Conservative proposal reads.

The platform doesn’t provide any details about what would be included in a proposed law, how broad it would be or how the Criminal Code would be amended. The platform also fails to explain why a new law would be needed to stop what the party describes as an “illegal blockade” or how such a law could be effective. 

The Conservative Party declined The Narwhal’s request for more information. A spokesman said that the party would provide more details during one of its daily announcements on the campaign trail.

Police approach Chief Howilhkat, Freda Huson, for arrest as her sister Chief Geltiy, Brenda Michell, sings in ceremony during the enforcement of Coastal GasLink’s injunction at the location of the Unist’ot’en healing centre on Feb. 10, 2020. Photo: Amber Bracken / The Narwhal

After this story was published, a reporter asked O’Toole about the promise at an Aug. 20 campaign stop in Winnipeg. The Conservative leader reiterated that the right to peacefully protest is “a fundamental part of our democracy” but that it “does not extend to blockading railroads, bridges, the things we need in the public good for people to get to work, for our economy, for our exporters to reach new markets.” 

“Critical pieces of infrastructure like rail and like bridges should not be illegally blockaded to make a political point,” O’Toole said. “In fact, when that happens it hurts Indigenous communities the most, many of whom are developing resources and for the first time in generations creating wealth and jobs for Indigenous communities.” 

“I think our plan is a common-sense approach to keep the economy moving,” he said in concluding his answer. 

O’Toole did not elaborate or provide detailed examples to explain how protests on key infrastructure sites might hurt Indigenous communities the most, or how his proposed solution would address this.

Belatedly, here is Erin O'Toole's response to his #Elxn44 proposal to increase punishment for protestors on key infrastructure like rail.He said they "should not be illegally blockaded to make a political point," and "when that happens it hurts Indigenous communities the most." pic.twitter.com/DqIUUiEAr5

— Fatima Syed / @fatimabsyed.bsky.social (@fatimabsyed) August 20, 2021

In light of the promise, some Indigenous leaders, lawyers and environmental groups told The Narwhal they were concerned, wondering if this is part of a rising trend of suppression of opposition against fossil fuel projects. 

“It seems like a wide-ranging, political posturing, when there are already remedies to get court injunctions and criminal charges against so-called disruptive behaviour,” said Cynthia Callison, founding partner of Callison & Hanna, a Vancouver law firm which represents Indigenous governments in legal matters. These remedies include what is already codified in Canadian criminal law: penalties and punishment for things like vandalism and trespassing. 

Alberta passed a similar law last year; it is now facing a constitutional challenge. Eighteen U.S. states have also passed similar laws since 2016. Indigenous land defenders and those standing in solidarity with them have been arrested during protests against the Trans Mountain pipeline expansion project and more. In one case in Washington state, a woman who disrupted a railway line is facing terror charges. 

There is a broad recognition that most protests around infrastructure development in Canada are rooted in solidarity with Indigenous Peoples, who don’t consent to some of these projects and aren’t properly consulted. 

Emmett Macfarlane, a political science professor at the University of Waterloo who specializes in constitutional law, questioned how this proposed law would work in tandem with Indigenous land rights and the state’s duty to consult on environmental projects. While the Canadian Charter of Rights and Freedoms guarantees the right to protest and peaceful assembly, there are already limits to it to ensure that right is carried out reasonably. 

“If the law is crafted properly, it would still allow some protest activity on these sorts of sites,” Macfarlane said. “I think it’s definitely motivated by concerns over our inability as a country to build more pipelines, which seems to be a big feature of the Conservative discourse. It’s certainly seeking to privilege those industries. That said, the train blockades and the like were highly disruptive and I think a lot of Canadians would support laws that limit protests like that.”

“I think we have to wait to see details because it’s certainly possible for laws like this to overreach.”

In photos: Wet’suwet’en matriarchs arrested as RCMP enforce Coastal GasLink pipeline injunction

Some say that nothing can stop an increase in civil action for stronger climate policies in the wake of the latest report by the UN Intergovernmental Panel on Climate Change, which finds that the planet is hotter now than it has been at any moment in the last 125,000 years and some of the changes can only be slowed not reversed.

“The fact is, we’re going to see a heck of a lot more escalation on the part of people power movements that want to see change and transition on the issue of climate,” said Clayton Thomas-Müller, a senior campaign specialist with 350.org. “People are going to hit the streets regardless of the draconian measures these lawmakers place, because the gravity of the climate crisis is too great.” 

Chief Allan Adam of the Athabasca Chipewyan First Nation urged the Conservatives to reconsider its proposal because “the more the state tries to repress defenders and people supporting Indigenous people, the more pushback they’ll get.” 

“If you look around the world right now — at all of these climate catastrophes that are happening — people are becoming more and more aware and people are becoming more and more determined to save what we have left, because our lives depend on it,” Adam said. “And no amount of state repression is going to be able to stop that.”

The cover of the Conservative Party of Canada’s 2021 election platform features a photo of leader Erin O’Toole and describes him as “the man with the plan.”

The Narwhal also contacted several energy companies; only Trans Mountain — a company owned by the federal government — responded to say they have no comment on any political platform. “Trans Mountain respects the right to peaceful, lawful expressions of interest,” a company spokesperson said in an email.

The Canadian Association of Petroleum Producers also declined to comment. A spokesperson said “We are unable to comment this week. However, please check in with us again next week as we will likely be able to offer general commentary on our vision for our industry.”

A toxic overlap of COVID-19 and environmental racism

Tony Maas, director of legislative affairs at Ecojustice, believes the counter approach to this proposal would be for the Conservatives to show their plan for engaging people in big decisions about the energy economy, climate change and more. Right now, there are legal routes for people to take — from courts to regulatory processes like the challenge of permits and land ownership — but for most Canadians, protesting is the easiest way to oppose such large-scale projects.

“The proposal really seems to be focused on trying to divide, when what we really need to be doing is putting in place laws and policies that inspire us and empower people to come together and confront the climate crisis,” he said. “We need to create tools and legal mechanisms that allow people to participate in decision-making but also hold governments and polluters accountable.”

“Right now, the Conservatives are pointing in the wrong direction.” 

Updated Aug. 20, 2021 at 11:49 a.m. PT to correct spelling of Tony Maas and to add new comments made in Winnipeg on Aug. 20, 2021 by Conservative Leader Erin O’Toole about his platform promise.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

In one of his first acts of office, U.S. President Joe Biden has issued an executive order that effectively kills the Keystone XL pipeline project.

The order states that the pipeline “disserves the U.S. national interest” and that approving it would be inconsistent with his campaign climate pledges.

Alberta Premier Jason Kenney called the move a “gut punch” and an “insult” and has threatened legal action to recoup Alberta’s $1.5 billion investment in the project.

Prime Minister Justin Trudeau issued a statement that expressed disappointment, but struck a far more conciliatory tone. He signalled a desire to work with the Biden administration and implicitly conceded that the pipeline won’t be resurrected again.

While the reaction from Alberta implies Biden’s move came as a shock, the truth is that cancelling Keystone XL was a key part of Biden’s election platform and was telegraphed clearly throughout the campaign.

Obama’s rejection

It’s worth remembering that Keystone XL was rejected previously by Barack Obama’s administration in 2015, after several years of controversy, and that the environmental concerns used to justify that decision have not gone away. This decision should have been expected and planned for.

But it would seem that both Alberta and TC Energy (formerly TransCanada) felt that there was a good chance the project would proceed despite Biden’s election win. Early in January 2021, TC Energy opened bidding on existing pipeline space expected to be freed up by the construction of the new line.

The Keystone XL cancellation will significantly impact Canada and Alberta. TC Energy has estimated that Canada would have added 2,800 jobs directly associated with this project, mostly in Alberta, and contends the United States would have seen 10,400 new positions.

The Biden administration’s cancellation of the Keystone XL pipeline was largely expected on both sides of the border, especially given former President Barack Obama previously rejected the project in 2015. Photo: Government of Alberta / Flickr

Let’s put that in perspective: in 2020, it was estimated that total oil and gas employment in Alberta was 128,180, and thus the number of lost jobs represents 2.2 per cent of the total sector employment in the province — a very significant proportion for a single project.

The loss of Keystone XL also will impact future projects in the province’s oilsands. We know that one of the reasons that companies are reducing investments in the oilsands is that there is a transport bottleneck that affects the ability to get new product to market.

Keystone XL would have been able to move 830,000 barrels per day. Total Canadian oilsands production is only 2.9 million barrels per day, so adding Keystone XL may have attracted new investment to the oilsands to take advantage of this transportation capacity, which in turn would have meant billions in royalties to the province. GDP growth resulting from this investment would have benefited all of Canada.

Read more: Trans Mountain, Coastal GasLink, Keystone XL: where things stand with Canada’s pipeline projects

The cancellation of Keystone XL could leave Alberta out-of-pocket for the $1.5 billion invested by the government earlier this year. This investment — almost $400 for each individual in the province — may be recouped through legal means or reinvested by the company, or simply written off.

The province also made $6 billion in loan guarantees that may be recovered. Overall, however, the province will likely lose money on this deal — and the voters ultimately will decide the price.

Energy East born again?

So what’s next?

There have been reports that some of the pipe and materials may be sold for scrap if Keystone XL can’t move forward. In reality, the majority of the actual pipe has not yet been laid, meaning pipes could easily be repurposed for other projects. So some investment may be recovered over an extended time.

Indeed, TC Energy may look to the past when figuring out its next move.

One option that might be explored is revisiting Energy East, a pipeline that would have seen 1.1 million barrels per day of Alberta oil travel over 3,000 kilometres to reach tidewater at Saint John, N.B.

Read more: Total’s Alberta oilsands writeoff is a wake-up call — not a cheap shot

Energy East was arguably the most complicated infrastructure project ever imagined in Canada, involving the federal government, six provincial legislatures, hundreds of municipalities and 180 traditional Indigenous territories. The project would have crossed thousands of waterways ranging from streams to major waterways including the South Saskatchewan, Red, Ottawa, and St. Lawrence rivers.

The project was hugely controversial, and was cancelled in 2017 — partly because former president Donald Trump had re-approved Keystone XL earlier that year.

Rethinking pipelines

But before backing yet another pipeline project, Alberta and all of Canada ultimately need to decide if more pipeline capacity is really needed.

Keystone XL struggled to find investors prior to Alberta’s decision to provide funds. The frequently cited “Canadian discount” in oil prices, which entails Canadian oil being sold at lower prices than the West Texas Intermediate (WTI) index, has in recent months been reduced as oil prices have begun to recover.

In Ottawa and in Washington, policies to address the climate emergency have taken precedence over new investment in conventional, fossil fuel-based industries.

The Keystone XL project was already struggling before the Biden administration’s cancellation. Now, Alberta and the federal government will need to think carefully on whether Canada really needs more pipeline capacity. Photo Amber Bracken / The Narwhal

The future of Canada’s oil sector may not be in volume, but in value.

Consider that four to five per cent of the volume of oil becomes high-value products like plastics, rubber and chemicals; these products can account for 40 per cent or more of the value derived from a barrel of oil.

New refineries are being designed that focus on these value-added products and minimize bulk fuel products; these new facilities may be smaller and require far less in terms of input, reducing the need for new pipelines.

The death of Keystone XL is a wake-up call for the oil sector. The old way of doing business is fading away, and it must innovate to survive.

Warren Mabee, Director, Queen’s Institute for Energy and Environmental Policy, Queen’s University, Ontario

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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