March 27, 2026 | Canada’s Pipeline Gamble Could Be a Big Win

Canada’s Pipeline Gamble May Be Paying Off

When Canada bought the Trans Mountain pipeline from U.S. giant Kinder Morgan in 2018 for $4.5 billion, skeptics were plentiful. Kinder Morgan had walked away from a planned expansion, unwilling to absorb the financial risk. Ottawa stepped in — and the expansion ultimately cost $34 billion, far above the original $7.4 billion estimate.

Now, with the Strait of Hormuz effectively closed by Iran since late February, that gamble looks prescient.

What Trans Mountain Does

The expansion increased pipeline capacity from 300,000 to 890,000 barrels per day, moving Alberta crude from Edmonton to Burnaby, B.C. There, oil is loaded onto Aframax tankers — mid-sized vessels carrying roughly 750,000 barrels at full capacity — which exit Burrard Inlet into the Pacific and sail to China in about 20 days.

One catch: the shallow inlet currently limits Aframax loading to about 70% of capacity. The Canadian government is seeking approval to dredge the channel, which would allow full loads. A further pipeline expansion of 360,000 barrels per day is also proposed.

The Economics

A Parliamentary Budget Office report from 2024 projected a modest but positive return over 40 years, assuming a toll of $10–11 per barrel and an 8% discount rate. That analysis was done before oil surged past $100 a barrel — which it did on March 8, 2026, peaking at $126.

At those prices, the tolls are easy to collect and the timeline to profitability shrinks considerably.

Why Hormuz Changes Everything

Roughly 20% of global oil normally transits the Strait of Hormuz. Asian markets — China, India, Japan, South Korea — receive about 84% of that flow. With Persian Gulf shipping disrupted, Trans Mountain’s Pacific route has gone from convenient to critical.

Goldman Sachs now calls this the largest supply shock in the history of global crude markets.

How long the disruption lasts remains the central question. A few weeks changes little. Years would transform the economics of Canadian oil exports — and vindicate a $34 billion bet that much of the country once considered reckless.

Hilliard MacBeth

Hilliard MacBeth March 27th, 2026

Posted In: Hilliard's Weekend Notebook

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