CDN NEWS | 
US NEWS 
Canada’s midstream energy sector is hitting all-time highs. Here’s what’s driving the rally — and what it tells us about the country’s energy future.
By Ian Biana
By Resource Works
More News and Views From Resource Works Here
Something remarkable is happening in Canadian energy markets. While pundits continue to debate the pace of energy transitions and politicians wrangle over climate targets, investors are voting with their wallets — and they’re overwhelmingly bullish on Canadian pipelines.
Every major midstream company in Canada has recently hit new all-time highs. Not just one or two outliers — the entire sector. That’s not a coincidence. It’s a signal.
The midstream thesis: Follow the molecules
The anonymous but influential energy analyst known as Doomberg has been making the case on recent podcasts that energy is far more fungible than most people appreciate. The world doesn’t just need electrons or molecules in the abstract — it needs them moved, stored, and delivered reliably. In Doomberg’s framing, the way to play the energy sector isn’t by betting on any single commodity. It’s by owning the infrastructure that moves all of them.
That thesis is playing out in real time on the Toronto Stock Exchange.
Canada’s midstream giants — the companies that transport, process, and store oil and gas — are delivering exactly the kind of returns that make institutional investors salivate: stable cash flows, growing dividends, and massive secured growth backlogs.
The numbers don’t lie
A January 2026 report from BMO Capital Markets lays out the bull case in stark terms. The Canadian pipeline and midstream sector has assembled approximately $63 billion in secured growth backlogs — and BMO estimates that figure could increase by up to 20% by year-end. A few years ago, a common investor criticism was that growth projects were drying up. That narrative has been decisively buried.
BMO’s top picks tell the story of a sector firing on all cylinders:
- Keyera (KEY) — Outperform
- TC Energy (TRP) — Outperform, 17.9% total return in 2025
- Rockpoint Gas Storage (RGSI) — Outperform
- Pembina Pipeline (PPL) — Outperform
- AltaGas (ALA) — Outperform, expanding LPG export capacity
The sector’s 2025 total return performance was led by South Bow at 19.5%, followed by TC Energy at 17.9% and Enbridge at 13.8% — all handily beating broader market indices.
BMO analysts Ben Pham and Alexander Donovan flag several tailwinds converging at once: growing Canadian export diversification, surging gas storage demand, and the emerging narrative around Alberta data centres requiring massive new natural gas supply. Pembina alone has flagged 320 mmcf/d of gas demand to feed its roughly 1.8 GW Greenlight data centre project, with some 20 GW of proposals currently in the queue across the province.
The market isn’t just looking at next quarter. It’s already pricing in growth through 2030.
The export imperative
A key driver of investor enthusiasm is Canada’s belated but accelerating push to diversify energy exports. The federal government has designated the next wave of LNG projects — including LNG Canada Phase 2 (14 mtpa) and Ksi Lisims (12 mtpa) — as “priority projects.” AltaGas has sanctioned its REEF Optimization Phase One, adding 25,000 bbl/d of LPG export capacity, with a potential Phase Two adding another 60,000.
For investors, these aren’t speculative bets. They’re contracted, permitted, or near-permitted projects with clear line-of-sight to revenue. The sector has moved from aspiration to execution.
Trans Mountain: The vindication pipeline
Perhaps no story better illustrates the gap between activist pessimism and economic reality than Trans Mountain. For years, opponents predicted the expanded pipeline would become a stranded asset — that the world was moving on from oil, that nobody would ship through it, that it would be a white elephant burdening Canadian taxpayers for generations.
Those predictions have aged poorly.
Trans Mountain’s Q3 2025 corporate presentation tells a different story entirely. The expanded system is now flowing at 84% of pipeline capacity year-to-date, moving roughly 746,000 barrels per day over the first nine months of 2025. The company is on track to deliver approximately $1.7 billion to Canada by the end of 2025, with returns expected to grow annually as stated tolls escalate by 2.5% each year throughout the contract life.
Since the expanded system entered service in May 2024, 380 vessels have loaded at the Westridge Marine Terminal in Burnaby. Roughly 60% of seaborne exports have headed to Asian markets, reaching 26 terminals across China, Korea, Japan, India, and Singapore. The shipping route from Vancouver to Asia is the shortest from North America — 60% shorter than from the U.S. Gulf Coast.
The expansion also narrowed the price differential on Canadian crude, putting more money in the pockets of producers and royalty-collecting governments alike.
It’s no wonder Ottawa appears to be in no rush to sell the asset. Despite the project’s well-documented capital cost overruns, Trans Mountain is now a cash-generating machine with contracted revenue, growing throughput, and an optimization program that could add up to 360,000 bpd of additional capacity over the next five years through drag-reducing agents, pump station additions, and terminal modifications.
At Resource Works, we were always skeptical of the doomsday predictions. The economics of moving Canadian crude to tidewater were sound, and the market is now proving it.
The paradox: Bullish on pipelines, but nobody will build new ones
Here’s where the story gets complicated — and where Canadian policymakers need to pay attention.
Even as investors pour money into existing pipeline companies, the prospect of building new pipelines remains essentially frozen.
Greg Ebel, the CEO of Enbridge — Canada’s largest pipeline company — made this painfully clear on the company’s Q4 2025 earnings call in February 2026. Despite being tapped by the Alberta government to provide technical expertise on a proposed new 1 million barrel-per-day oil pipeline to the West Coast, Ebel said flatly that Enbridge has no intention of leading or funding such a project.
“Not the type of risk that we’re looking to take on at this time,” Ebel told investors. “You don’t need to with all the other opportunities.”
Ebel referenced Enbridge’s experience with the Northern Gateway pipeline, on which the company spent over $400 million before the Trudeau government refused to approve it in 2016. The lesson, from a shareholder’s perspective, was clear: Canadian regulatory and political risk makes new major pipeline construction uninvestible.
BMO’s analysts echoed the sentiment, noting they “struggle to see a scenario where ENB or SOBO would invest unless adequate return protection” is provided.
This creates a striking paradox. The same sector that is delivering record returns to investors is simultaneously telling the country that the policy environment makes new construction too risky to contemplate. Investors are rewarding companies for what they’ve already built — not for what they might build next.
What this means for Canada
The investor enthusiasm around Canadian midstream energy is a vote of confidence in the underlying economics of the sector. The world needs Canadian oil and gas. It needs to be moved, stored, and shipped. And the companies that do this are being richly rewarded.
But the reluctance to build new infrastructure is a warning sign. Canada’s pipeline capacity from the Western Canadian Sedimentary Basin sits at roughly 4,600 kbpd — and Trans Mountain alone represents about 20% of that egress. If production continues to grow and no new capacity is added, the country will eventually find itself back in the same egress crunch that hammered crude prices and provincial revenues just a few years ago.
The midstream rally tells us two things at once: the economics work, but our strung-out politics are in desperate need of a compassionate intervention by concerned family members.
For Canadians watching their pension funds and investment portfolios benefit from pipeline dividends, the message should be clear. These companies are generating extraordinary value from infrastructure that was, in many cases, built over the objections of the same voices now calling for a rapid energy transition. Trans Mountain was supposed to be a catastrophe. Instead, it’s returning billions to the federal treasury.
The question now is whether Canada can create the conditions for the next generation of energy infrastructure — or whether investors will continue to deploy that capital elsewhere, in jurisdictions where the rules are clearer and the timelines are shorter.
As Greg Ebel put it in his October 2025 speech to the Empire Club: “When Canada builds, Canada prospers.”
The market agrees. It’s time for policy to catch up. Education and serious public conversations are needed now, more than ever.
Ian Biana is a writer for Resource Works, a non-partisan organization that champions responsible resource development in British Columbia and Canada. Reach Ian at [email protected].
Share This:
