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‘For Canada, we should be doubling down on our pipeline to the West Coast, because it could create some challenge long term. I don’t see any challenge short term. Venezuela is going to take a while to develop,’ said Bob Geddes
By Chris Varcoe
Bob Geddes knows the Canadian oil business, having worked in the sector for more than four decades.
He also knows the oil business in Venezuela, as Calgary-based Ensign Energy Services — where he serves as company president — has operated in that country for about 25 years.
The announcement by President Donald Trump last week that the United States has reached an agreement to take control of Venezuelan oil reserves — as the South American country seeks to increase oil production after years of deterioration — warrants attention in Canada, said Geddes.
More competition for Canadian crude heading south is coming, over time.
“We’ve got the only rigs drilling in Venezuela right now, so we’ve got a pretty good idea of what we think is going on . . . Venezuela has basically become America’s gas tank,” Geddes said in an interview Monday.
“For Canada, we should be doubling down on our pipeline to the West Coast, because it could create some challenge long term. I don’t see any challenge short term. Venezuela is going to take a while to develop.”
Speaking to reporters on Tuesday, Premier Danielle Smith said most analysts expect an “expensive and long haul” before Venezuela can significantly increase its output, while Alberta can provide a safe environment to companies looking to develop more resources.
“We want to look at ways that we can get more of our product to Europe. We’re certainly looking at ways we can get more of our product to Asia, and it really just reinforces why the West Coast oil pipeline is the right answer,” Smith said, noting the price differential on Canadian heavy oil narrowed after the opening of the Trans Mountain pipeline expansion in 2024.
“If I had a wish or an ask, it would be let’s accelerate the plan for the West Coast oil pipeline, get it to market faster.”
The announcement by the United States reportedly covers 17 future oilfield developments in Venezuela, containing more than 60 billion barrels of proven reserves. Analysts believe the deal could have implications for the Canadian sector in the longer term, with more oil from Venezuela — similar to Canadian heavy crude — eventually making its way into U.S. Gulf Coast refineries.
The deal is expected to lead to almost US$100 billion in investment to boost output in the country.
A report by consultancy Rystad Energy indicates there is a feasible path for Venezuelan production to top three million barrels per day by the mid to late 2040s by developing the strategic projects. Last year, total production in the country sat at about one million bpd.
Yet, after years of underinvestment, the rate at which output can increase will depend on “how quickly operational bottlenecks are resolved, including the return of rigs and oilfield services,” the report states.
Canada is the largest foreign supplier of crude to the United States, exporting an average of 3.9 million barrels per day south in 2025. Alberta heavy oil is shipped into the American Midwest, but also to the Gulf Coast.
The head of the Oil Sands Alliance, a group of five large oilsands operators in Alberta, said the deal in Venezuela could have ramifications for the Canadian industry.
“What people often forget is the last big ramp-up of Canadian oilsands production — from the kind of early 2000s to the mid-teens — coincided exactly with Venezuela’s drop-off in production over the same period,” alliance president Kendall Dilling said in an interview.
“Now, we’re kind of the incumbent. It’s ours to lose, but Venezuela very much has the resources and the market access — and especially with U.S. support now, if they start increasing production — it’s a very significant competitive threat to us, which then also speaks to the importance of the West Coast oil pipeline.”
Since the U.S. captured and removed former Venezuelan president Nicolás Maduro in January, rising oil output in the country — and a loosening of U.S. sanctions — has contributed to an increased price differential for Canadian heavy crude by about $4 a barrel, said Rory Johnston, founder of the Commodity Context newsletter.
The U.S. deal may slightly increase the pace of investment into the country, he said. The other effects may be more political in nature, as the U.S. and Canada are mired in a trade war. Energy remains this country’s largest export item heading south.
“This is primarily a political announcement,” said Johnston.
“It is going to increase the aggressiveness, increase the perceived sense of leverage, from the White House, even if it has not materially changed anything.”
As for Canada, Geddes said this should increase the push to accelerate plans for a new West Coast pipeline, proposed by the Alberta government — or build two lines to the coast.
The changing situation in Venezuela reinforces the argument for a pipeline to the Pacific Ocean, added Dilling.
“We are ahead right now, but they’re comparable resources . . . There’s increasing demand, but ultimately it’s a competition, and somebody is going to capture that market share and somebody is going to be on the outside looking in,” he added.
“This is a moment-in-time opportunity, and we’ve got to get a little bit gritty here and go get our piece of the pie, or else somebody else will take it.”
Chris Varcoe is a Calgary Herald columnist.
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