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“The best laid schemes o’ mice an’ men / Gang aft agley.”
Robert Burns 1785 “To a Mouse”
That famous line, “The best laid schemes o’ mice an’ men / Gang aft agley,” is from Scottish poet Robert Burns‘ 1785 poem “To a Mouse,” meaning that even the most carefully made plans of humans and animals often go wrong or become disrupted by unforeseen circumstances, bringing disappointment instead of the promised joy, as Burns reflects on destroying a mouse’s nest while ploughing.
Prime Minister Carney’s ‘well-laid plans’ for Canada to become a net zero energy superpower may suddenly be at risk – with significant consequences for Alberta. Recent events in Venezuela should force a careful re-examination of the economic viability of producing “decarbonized” heavy oil.
Having amassed military forces in the Caribbean throughout 2025 under Operation Southern Spear, on 3 January 2026 the Trump administration launched Operation Absolute Resolve, termed one of the most dramatic U.S. military actions in the Western Hemisphere since Operation Just Cause in Panama in 1989. Targeting multiple locations across Venezuela it led to the capture and removal of Venezuelan President Nicolás Maduro and his wife Cilia Flores. Initially held aboard the USS Iwo Jima they have been taken to the U.S. to face criminal charges for “narcoterrorism” and other offences.
In what has been termed a “$17 trillion reset”, Alberta may be at risk of losing its hard-won U.S. Gulf Coast (USGC) dominance to a resurgent rival – this coming at a time when Alberta and Canada are proposing to expend billions on “decarbonized” oil with punitive regulatory conditions that would not apply to Venezuelan, or any other international producers, of heavy oil. With U.S. forces capturing President Nicolás Maduro and President Trump declaring American administration of Venezuela to “get the oil flowing” again, the revival of Venezuela’s vast heavy crude reserves—over 300 billion barrels, the world’s largest—could flood the market with a cheaper, proximate supply tailored to U.S. refineries.
Historically, Alberta capitalized on Venezuela’s collapse when production there plummeted, due to mismanagement and sanctions, from 3 million barrels per day in the mid-2000’s to under 1 million today. This allowed Canadian heavy blends like Western Canadian Select to become the dominant feedstock for U.S. Gulf Coast refiners. In 2025, Canada supplied over one-third of the region’s heavy imports, tightening differentials and bolstering Alberta’s revenues.
A U.S.-revived Venezuelan oil industry, even if investment for infrastructure takes years to implement, would be a serious threat that risks displacing Canadian oil with lower-cost alternative supplies that also are geographically closer to U.S. refiners. This seismic geopolitical shift now confronts Prime Minister Mark Carney and Premier Danielle Smith as they attempt to implement their November 2025 Memorandum of Understanding (MoU), one that commits Alberta to produce “decarbonized” oil through massive carbon capture projects like Pathways Plus associated with Carbon Pricing Equivalency Agreements, are vastly expensive measures that could undermine Canadian price competitiveness against unsanctioned Venezuelan crude. Possibly of greater importance, Canadian insistence on “net zero” targets associated with pipelines and heavy oil production, policies that have caused significant capital flight from the Canadian energy sector, may further diminish the attractiveness of Alberta oil projects to international investors. Since 2015 Canada has experienced a flight of investment capital approaching CAD$650 billion due to lost, or deferred, resource projects – particularly in the energy sector. Will these policies and plans for the Alberta-Canada MoU allow Canada to become an “energy superpower” in this new age of international competition?
While short-term disruptions from the U.S. intervention might temporarily tighten heavy supply (and therefore benefit Canadian producers) the long-term prospect of U.S.-controlled Venezuelan oil production unquestionably represents a sea-change for international oil markets and may, potentially strengthen the economic case, if not urgency, for new Canadian Pacific pipelines to provide market access away from the U.S.
Historically, the U.S.–Venezuela oil trade relationship was a highly integrated system that was seriously disrupted, beginning in the 1970’s, by nationalization programs and by subsequent U.S. sanctions. The U.S. Gulf Coast (USGC) refinery complex is among the most highly developed in the world, one that required billions in investments for coking, desulfurization and hydrocracker units specifically designed to process heavy, sour Venezuelan crude. Importing approximately 40 million barrels of heavy crude per month in 2025, the USGC refiners scrambled to replace lost, sanctioned Venezuelan oil with Canadian Cold Lake, Mexican Maya and Brazilian heavy grades. Canada, offering a supply that was stable, pipeline‑connected and geopolitically low‑risk was the only producer with enough heavy crude to meaningfully offset those Venezuelan losses. In the twelve months ending February 2025, Canada supplied 13.6 million barrels/month representing 34% (the largest single source) to those U.S. refiners. As a result, Canadian Cold Lake and WCS differentials tightened with the Cold Lake WTI discount narrowing from $13.57/bbl (February) to $9.45/bbl (May).
However, with a federal government consumed with concerns about emissions and the attainment of an improbable national goal of Net Zero, and with terms in an MoU that will require material capital expenditures to produce “decarbonized” oil, Alberta and Canada would be wise to recognize that this geopolitical sea-change will affect not just prior assumptions about Canadian oil production (and MoU’s) but may yet work to change the fundamental economic assumptions of global oil economics.
Premier Smith has consistently argued that Canada needs to develop an “alternate reality” one in which Alberta oil producers and international export pipelines allow Canada to contribute to global energy security in ways that preclude “economic self-destruction.” In face of these geopolitical events, especially at a time of mounting national deficits, Canada may have precious little time to get its act together to effectively, and competitively, maintain and secure international markets for Alberta oil.
Dr. Ron Wallace is a former National Energy Board member who has also worked in the Venezuelan heavy oil sector.
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