Canada’s Oil And Gas Investment Outlook Improves Amid New Energy Deal

Canada’s oil and gas sector is showing renewed investor confidence following a new federal-provincial energy agreement, with industry executives saying the country has become more attractive for energy investment under Prime Minister Mark Carney’s government.

The agreement between Ottawa and Alberta eases several environmental restrictions, outlines a revised industrial carbon pricing framework for the oil sands sector, and promises faster regulatory approvals for major energy projects. Officials say the deal could help advance plans for a new 1-million-barrel-per-day crude oil pipeline connecting Alberta to British Columbia’s coast.

Industry leaders welcomed the move as a signal of greater policy stability after years of complaints that Canada’s regulatory environment and climate policies discouraged investment. Executives noted that clearer rules and streamlined approvals could improve the long-term risk profile for large-scale energy developments.

However, concerns remain about Canada’s global competitiveness. Industry representatives emphasized that energy companies continue to compare investment opportunities against lower-cost jurisdictions, particularly the United States, where federal policies strongly support expanded oil and gas production.

The proposed pipeline remains a central part of Canada’s energy growth strategy, but significant hurdles remain. No private developer has yet committed to building the project, and analysts estimate expanding oil sands production enough to fill the pipeline could require up to C$100 billion in new investment over the coming decade.

The deal also links pipeline development to emissions reduction commitments. Alberta’s industrial carbon price will gradually increase over time, creating stronger incentives for heavy emitters to invest in cleaner technologies and carbon capture systems. Federal approval for the pipeline is expected to depend partly on progress toward large-scale carbon capture infrastructure.

While the agreement is being viewed as a major step toward balancing economic growth with climate policy, industry groups and environmental advocates remain divided over whether the measures go far enough - or move too far - in either direction.

Improving O&G investment outlook in Canada reshapes TCFD-aligned transition-risk assumptions, and it changes how lenders and offtakers should be pricing sector exposure. Our sustainability-due-diligence teams help clients evaluate what these dynamics mean for TCFD scenario planning.