Ottawa and Alberta are close to finalizing an energy agreement long pushed by Premier Danielle Smith to expand her province’s oil and natural gas opportunities, with Privy Council Clerk Michael Sabia playing a central role in the negotiations, according to two federal sources.
The emerging deal — expected to take the form of a memorandum of understanding — would outline plans for an oil pipeline from Alberta to the northwest coast of British Columbia. It also contemplates a limited exemption to the federal oil-tanker ban in that region, changes to industrial carbon pricing to support large-scale carbon capture technology, and easing or removing the industrial emissions cap.
Federal and provincial officials say momentum is building and hope the agreement can be announced before the United Conservative Party’s provincial convention next week.
The discussions mark a notable shift from the strained relationship Alberta had with Ottawa under the Trudeau government. Prime Minister Mark Carney has taken a more collaborative stance, stressing his goal of making Canada an energy superpower while maintaining climate commitments. Large energy and infrastructure projects have been elevated within the federal Major Projects Office — a pillar of Carney’s strategy to strengthen Canadian sovereignty over critical developments.
Premier Smith said Monday that she and Carney share a “new vision” for Alberta–Ottawa collaboration, but suggested the final outcome depends on whether skeptical voices in Carney’s caucus can be overcome. She previously believed a deal would be ready by the Grey Cup on Sunday, though that timeline slipped as Carney departed for the UAE and South Africa ahead of the G20 summit. He is expected back on Nov. 24. The UCP convention begins Nov. 28.
Sources say Sabia became directly involved after Canada–U.S. tariff talks collapsed over an Ontario television advertisement that angered President Donald Trump. Sabia, along with Natural Resources Minister Tim Hodgson, is now leading federal negotiations, while Carney and Smith continue to engage frequently..
Any northwest B.C. pipeline would depend on a private-sector sponsor, approval from Indigenous communities along the route, and federal environmental clearance. It is still unclear whether B.C.’s NDP government — publicly opposed to altering the tanker ban — would need to sign off on the MOU.
Sources say the deal could also reference reviving the cancelled Keystone XL pipeline to the United States, though that remains tied to stalled trade talks with Washington.
While discussions are advancing, sources caution that nothing is finalized. However, Ottawa appears open to narrowly tailored waivers, including lifting the tanker ban only in the zone where the pipeline would reach the coast.
B.C. Premier David Eby remains strongly opposed. At the B.C. NDP convention over the weekend, he said any easing of the tanker ban would undermine First Nations and coastal community support for existing resource projects, several of which were recently sent to the federal Major Projects Office for review.
The Pathways Alliance carbon capture project — a 400-kilometre pipeline designed to transport captured carbon from oil-sands sites to a storage hub near Cold Lake — is also tied to the negotiations. The proposal aims to cut emissions by 22 megatonnes annually but has stalled as companies cite revenue uncertainty.
The Trudeau government introduced a tax credit covering up to 50 per cent of project capital costs, with Alberta offering a further 12 per cent subsidy. Pathways members, however, have been hesitant to proceed.
Carney’s recent budget committed to improving the industrial carbon pricing system, which could increase certainty for industry and enable the project to move forward.
Carney managed to secure passage of his first budget on Monday, helped by Green Party Leader Elizabeth May, after assuring her he would uphold earlier emissions-reduction commitments.
Asked Tuesday how a new oil pipeline squares with those promises, Carney responded: “We’re part of an energy transition, we’re going to help to lead it… That means Alberta, that means Quebec, that means Ontario, that means all of Canada — means all forms of energy.”
