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Pumpjacks draw out oil and gas near Carstairs, Alta., in February, 2025.Jeff McIntosh/The Canadian Press
Prime Minister Mark Carney is trumpeting his support for Canada’s oil producers as they struggle with the uncertainty of a U.S. takeover of Venezuela’s oil industry, saying they should be able to dodge the threat.
Mr. Carney said on Tuesday Canadian producers will be competitive over the medium to long term. The country’s production is low-risk, low-cost and may get more access to global markets should a new pipeline to the West Coast get built, he said.
“And in that context, a pipeline and exports to Asia, we’ve got competitive product, and we’d be diversifying our markets, and that’s one of the reasons why we signed the comprehensive MOU with Alberta. So we’d be working toward that,” Mr. Carney said in Paris.
Mr. Carney has previously pushed for climate action over increasing fossil fuel production, but has been increasingly warming to the industry as trade tensions simmer into a new year and sovereignty threats persist.
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Last year, the federal and Alberta governments signed a memorandum of understanding to jointly pursue a new oil pipeline to the B.C. coast from Alberta. A route has yet to be decided for the proposal, and no private-sector proponent has stepped forward to build it. It also faces opposition the B.C. government and from First Nations on the province’s northern coast.
Robert Johnston, director of energy and natural resources policy at the University of Calgary’s School of Public Policy, said he was heartened that the Prime Minister made the comments to help calm market fears that resulted in a selloff in Canadian energy shares on Monday.
“I think focusing on the positives of our oil sector, and trying to tackle the challenges and the shortcomings is the right approach. I think in the past we were sort of too stuck on the opposite of that,” Mr. Johnston said.
The potential for increasing Venezuelan exports rattled markets after U.S. forces captured President Nicolás Maduro and his wife in a military raid on Saturday. Mr. Trump asserted that “we’re in charge” of the country and would bring in U.S. oil companies to take over energy infrastructure that has been underfunded and mismanaged for years.
Both countries have massive reserves of heavy crude oil, and Canada’s exports to the U.S. have surged as Venezuela’s have dwindled under sanctions. The prospect of stiffer competition injected new uncertainty into the Canadian oil patch, said Menno Hulshof, analyst at TD Cowen.
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It could be several years before Venezuelan output increases meaningfully, given the record of civil unrest that tends to follow regime change globally. Meanwhile, the government in charge will have to develop a fiscal policy and companies will have to amass capital and labour to fix dilapidated infrastructure, he said.
Previously, the outlook for Canadian heavy oil was quite positive, with discounts to West Texas Intermediate benchmark oil, known as differentials, narrower than historical levels with new access to Asian markets via the expanded Trans Mountain pipeline.
“The question now is, can Canada compete on heavy oil on a timeline that is impossible to define?” Mr. Hulshof said.
Financial risks in the oil sands, as the Prime Minister suggests, are smaller than in Venezuela. Canadian projects face high upfront costs but the break-even cost of a barrel is much lower once they get going.
Given substantial geopolitical risks in Venezuela, oil majors would seek a far higher risk-adjusted return than what they expect in the oil sands, Mr. Johnston said.
ATB Financial analyst Carol Kamel wrote that production can continue for decades with minimal depletion once a project is built. She pointed to Canadian Natural Resources’ oil sands mining and upgrading assets, which still hold 43 years of reserve life.
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Operators have also achieved major cost efficiencies through the use of autonomous haul trucks, artificial-intelligence inspection robots and better water management, she said.
On Monday, Calgary-based Suncor Energy Inc. said it had met several targets a year ahead of schedule – including reducing the break-even cost of a barrel by US$10. Suncor has also significantly increased production, hitting 860,000 barrels per day in 2025, up 32,000 barrels per day from 2024. Those figures reflect a broader trend across the sector that has seen record volumes pumped out of the oil sands.
If a rise in Venezuelan production becomes a competitive threat for Canadian oil shipments on the U.S. Gulf Coast, it strengthens the case for a new pipeline to the west, despite the fact that several risks remain, Mr. Hulshof said.
On Tuesday, Alberta Premier Danielle Smith’s United Conservative Party government set up a website to promote a new, multibillion-dollar Northwest Coast oil pipeline, saying the application should be ready to submit to the Major Projects Office by July 1.
Ms. Smith said on social media that the situation in Venezuela only adds to the importance of expediting construction of the project.
However, B.C. Premier David Eby, a staunch opponent to such a project, said the toppling of Mr. Maduro and its potential impact on U.S. oil markets underscores the need to build domestic refining capacity to process Canadian crude.
Mr. Eby, at an unrelated news conference, said he welcomed the departure of Mr. Maduro but said the U.S. intervention is unsettling, “and I think that it underlines the critical work that we need to do as Canadians to deepen our independence, to stand on our own two feet,” he told reporters.
He noted that the Trans Mountain pipeline required a massive public bailout, and there is currently no private investor for a new pipeline.
“I don’t understand why, if we’re talking about massive public investment into supporting Albertans in this fragile global time, we can’t talk about supporting all Canadians with oil and gas products that are made right here at home while we transition,” he said. “And so I hope that that’s where some of the conversation goes following the uncertainty that comes from Venezuela.”
The industry has for decades closed refineries across the country, saying they were unprofitable given the relatively small size of the domestic market.
Mr. Johnston said the best way for Canada to deal with a potential oil-supply shock is to diversify markets. “So from that perspective I think it does bolster the case. It’s not that I think that the U.S. is an unreliable partner or we’ll be flooded by Venezuelan crude. It’s just that, even with the Trans Mountain expansion, we’re still far too dependent on a single market.”
With reports from Justine Hunter in Victoria and Eric Reguly in Paris
