Don’t expect oilpatch investment to flood in overnight after Ottawa-Alberta ‘grand bargain,’ experts say

A long-awaited deal is set to be unveiled Thursday that reportedly will include support for a new oil pipeline to the B.C. coast, as well as exemptions for Alberta from federal environmental laws.

Those moves will likely be received with open arms amongst industry leaders in the oil and gas sector. The argument has often been made that uncertainty over regulations, paired with challenges in getting products to market, is chasing away new investment.

But even if this agreement reduces some of that friction, experts say it won’t necessarily trigger a sudden flood in spending.

A major reason is oil prices, said Andrew Leach, who teaches economics and law at the University of Alberta. 

The benchmark North American crude blend known as West Texas Intermediate, or WTI, is currently priced below $60 US, and the U.S. Energy Information Administration projects prices will decline to an average of $55 US in 2026. Projections vary, but others see prices headed even lower in 2027.

“If that’s the environment we’re headed to … all you have to look at is the operating costs and operating profits of these facilities,” Leach said. “You’ll get a sense that that’s going to disrupt things at a scale no federal policy exemption could correct.”

In 2014, oil and gas investment in Canada ranged around $80 billion. 

In 2025, it’s closer to approximately $35 billion, according to the latest numbers from the ARC Energy Research Institute, which models the entire Western Canadian Sedimentary Basin. 

For years, growth was underpinned by visions of “$100 oil, $200 oil, $300 oil,” but those days are gone, Leach said.

“The world is awash in cheap energy, which has a whole bunch of positives,” he said. “But when you’re sitting on a trillion barrels of oil, the fact that the world’s awash in cheap energy is generally bad news.”

Alberta’s oilsands hit a record production high in 2025 as companies invested in smaller expansions. 

But the last major oilsands facility was Suncor’s Fort Hills mine, which opened in 2018. Even with a new pipeline, building a new oilsands facility would require a massive investment to the tune of billions of dollars.

Leach said he doesn’t see that happening, unless there’s a massive rebound in long-term price expectations.

Richard Masson, an executive fellow at the University of Calgary’s School of Public Policy and the former CEO of the Alberta Petroleum Marketing Commission, agreed there’s unlikely to be a new mine from a new operator.

“The existing players have all the best leases and have economies of scale and experience, so will focus on mine pit replacements and incremental expansions,” he said.

Masson said companies have started to invest more in growth, with Canadian Natural Resources, Suncor and Cenovus among those pursuing projects.

But in his view, the big barrier to more of that happening has been market access.

“We had grown production really quickly, and then we didn’t have enough pipelines, and then the differential widened a lot,” he said, referring to the price gap between WTI and the Canadian price of oil, Western Canada Select.

“Companies said, ‘I’m not going to spend hundreds of millions or billions of dollars, if I can’t get my product to market at a good price.’ And so growth really slowed down.”

Masson said he thinks it’s necessary to amend the federal regulations to provide more clarity. Once that happens, growth can speed up to the extent that market access is available.

But he stressed that a new pipeline isn’t a simple proposition.

Canada has embarked on a variety of pipeline misadventures over the past decade, including Keystone XL, which had a winding history of approvals and rejections. 

“We messed up so many things on building pipelines in the last decade. It’s going to be super difficult to overcome,” he said.