Alberta premier says Canada could boost oil export to U.S., calls for major new pipeline

By Nia Williams

(Reuters) -Canada could add over a million barrels per day (bpd) of oil export capacity to the United States over the next two years, Alberta Premier Jason Kenney told a U.S. Senate committee on Tuesday, while also calling for a new cross-border oil pipeline.

However, federal Natural Resources Minister Jonathan Wilkinson said there was little discussion in Ottawa or Washington about a new oil pipeline, and warned that narrowly focusing on fossil fuel security risked hindering climate goals.

Kenney and Wilkinson were in Washington addressing a Senate energy and natural resources committee on the issue of energy security, as countries around the world face rising crude prices and tight supply following Russia's invasion of Ukraine.

Their contrasting remarks illustrate how the federal Liberal government is often at odds with conservative politicians like Kenney over how best to manage Canada's vast oil and gas wealth while also reducing climate-warming carbon emissions.

"With political will from Washington we could also get another major pipeline built that would forever allow the United States to free itself from imports from hostile regimes," Kenney told the committee, adding Alberta is the largest source of U.S. energy imports.

The Canadian government has previously said Canada could increase oil pipeline exports by 300,000 bpd this year.

Kenney said an extra 200,000 bpd could be shipped south by rail, while technical improvements from midstream companies could add as much as 400,000 bpd of pipeline capacity by next year. The Canadian government-owned Trans Mountain pipeline expansion project is expected to be finished late next year, and will add another 600,000 bpd, he said.

Wilkinson told Reuters after the Senate hearing that this was the first he had heard of a potential increase in rail capacity or technical improvements, and any increase in oil exports to help offset lost Russian supply would need to be consistent with Canada's climate goals.

"The discussions I was having with White House were more forward-looking, about hydrogen, about critical minerals, about clean technologies," he said.

Canada exports around 3.8 million bpd of oil to the United States and until recently faced pipeline constraints that left crude bottlenecked in Alberta. U.S. President Joe Biden revoked a key permit for the Keystone XL pipeline in early 2021, infuriating the Canadian energy industry.

However with the start-up of Enbridge's Line 3 replacement project last year, Canadian export capacity is now broadly in line with production.

Energy analyst Rory Johnston, founder of the Commodity Context newsletter, said oil production is expected to only grow about 100,000 bpd a year going forward, meaning more export capacity would not necessarily mean more barrels crossing the border.

(Reporting by Nia WilliamsEditing by Bernadette Baum, Marguerita Choy and Nick Zieminski)