For decades, Canada’s energy trade has had one overwhelmingly convenient customer: the United States. That relationship still defines the sector. In 2025, Canada exported $197.8 billion worth of energy products to 137 countries, yet 85% of that value still went to the U.S. The concentration reflects geography, decades of pipeline and power-grid integration, and American demand for Canadian crude oil, natural gas and electricity.
But the strategic calculation is changing. Ottawa, provinces, Indigenous partners and private investors are now backing Pacific pipelines, LNG terminals, port expansions and stronger east-west electricity links designed to give Canadian producers more than one major route to market. The objective is not to abandon the U.S. It is to make Canadian energy less vulnerable to a single buyer, a single border and sudden changes in American trade policy.
Why the 85% Dependence Is So Hard to Undo
Canada’s dependence on American energy buyers was built into physical infrastructure over generations. The Canada Energy Regulator says more than 95% of Canadian crude oil exports went to the United States in 2024, while nearly all conventional natural-gas exports historically flowed south through cross-border pipelines. In 2025 alone, Canadian exports of crude oil, refined petroleum products, natural gas and natural gas liquids to the U.S. were worth $157.5 billion. Electricity is even more geographically constrained: Canada’s international electricity trade is entirely with the United States, connected through 86 international power lines.
That makes diversification more complicated than simply finding customers in Asia or Europe. Pipelines terminate in specific markets, electricity cannot be loaded onto a ship, and refineries on both sides of the border have evolved around reliable cross-border supply. The regulator’s 2026 outlook says the United States remains the dominant destination for Canadian crude under existing infrastructure because most western export pipeline capacity still points south. Canada therefore faces a construction problem as much as a trade problem: new buyers matter only if producers have practical, competitive routes to reach them.
Trans Mountain Has Already Changed the Oil Map
The strongest evidence that infrastructure can change trade patterns is the Trans Mountain Expansion. The project entered service in May 2024 and nearly tripled the system’s capacity to about 890,000 barrels per day. The Canada Energy Regulator says the expansion increased western Canada’s crude export capacity to tidewater by roughly 700%. From June 2024 to June 2025, an average of 23 vessels a month left the Westridge Marine Terminal near Vancouver, carrying oil to the U.S. West Coast and overseas customers. Since the expansion started, Canadian crude exports to countries other than the U.S. have more than tripled.
China has become the largest buyer of Trans Mountain’s seaborne exports, taking roughly 60% of those shipments according to Natural Resources Canada. Statistics Canada also found that non-U.S. energy exports rose 22.3% to $28.8 billion in 2025, helped by higher shipments to China, Hong Kong and the Netherlands. The federal government estimates the non-U.S. share of Canadian crude exports has climbed from less than 3% before the expansion to roughly 10%. That is still modest beside the U.S. market, but it shows that market concentration can move quickly once transportation capacity exists.
LNG Canada Gives Natural Gas a Pacific Exit
Natural gas has historically been even more locked into the American market than oil. In 2025, Canada exported about 8.6 billion cubic feet per day of natural gas through conventional trade channels, nearly all to the United States. The breakthrough came in June 2025, when LNG Canada in Kitimat, British Columbia, began shipping liquefied natural gas directly overseas. By August 2026, Canada had sent roughly 130 LNG tankers to Asia, equal to about 9.7 million tonnes of LNG. By September, LNG Canada was exporting around one million tonnes a month, all to Asian markets.
The next step is much larger. On September 29, 2026, LNG Canada’s partners approved Phase 2, a $33-billion expansion that will double the terminal’s capacity from 14 million to 28 million tonnes annually. The decision also triggered a second phase of the Coastal GasLink system that feeds the terminal from northeastern British Columbia. For Canadian gas producers, the significance goes beyond additional volume. A molecule of gas produced in Western Canada can now reach buyers across the Pacific without first depending on a U.S. pipeline market, creating a genuine second pricing and demand outlet for the sector.
European Buyers Are Signing Up for Canadian LNG
Asia is the natural market for British Columbia LNG because of geography, but Canada’s diversification push is also reaching Europe. The proposed Ksi Lisims LNG project on the northern British Columbia coast has signed a series of long-term offtake agreements in 2026. Germany’s Uniper agreed to buy two million tonnes a year for up to 20 years, with first deliveries expected in 2032. Germany’s SEFE has an agreement for one million tonnes annually for up to 20 years, while Santos signed a heads of agreement for another one million tonnes a year over 20 years. Ksi Lisims is designed for up to 12 million tonnes of annual LNG exports.
Those contracts matter because they create committed customers before a project is built, helping support financing for capital-intensive export infrastructure. They also broaden Canada’s energy relationships beyond the Pacific. The federal government estimates that less than 0.01% of Canadian natural-gas exports went to non-U.S. markets in 2024, but projects now advancing could raise that share to about 55% by the early-to-mid 2030s. That figure is a projection rather than a guarantee, and Ksi Lisims still has development milestones ahead. Even so, long-term European contracts show that diversification is moving from diplomatic ambition into commercial commitments.
Pacific Link Would Push Oil Diversification Much Further
On October 1, 2026, Ottawa listed the proposed Pacific Link oil pipeline as a project of national interest under the Building Canada Act. The plan is designed to move an additional one million barrels per day of Alberta crude to Canada’s West Coast for shipment to global markets, particularly Asia. Trans Mountain Corporation is leading project development, Pembina Pipeline is contributing private-sector expertise, and the federal and Alberta governments plan to share ownership. Indigenous communities are to be offered a minimum 10% equity interest supported by federal and provincial loan-guarantee programs.
The project is still a proposal, not an operating pipeline. Over the next year, the Major Projects Office and Canada Energy Regulator are expected to conduct consultations and develop the federal conditions for the project, with a target of September 1, 2027. Ottawa estimates Pacific Link could support about 140,000 jobs at peak construction and upstream development and generate more than $20 billion in annual GDP, but those figures depend on the project proceeding and on future market conditions. Its strategic significance is easier to see: adding another million barrels a day of Pacific-facing capacity would give Canadian producers far more ability to choose between American and overseas buyers.
Ports Are Becoming Part of Canada’s Energy Strategy
Pipelines and LNG plants cannot diversify trade on their own. Canada also needs ports, terminals, railways and marine capacity able to handle greater export volumes. The federal government has set a broader goal of doubling non-U.S. exports by 2035, which would add roughly $300 billion in annual goods-and-services exports compared with the 2024 baseline. The Spring 2026 fiscal update committed $6 billion to a Trade Infrastructure Strategy, including a $5-billion Trade Diversification Corridors Fund aimed at ports, railways, roads and other export-enabling infrastructure.
The Port of Vancouver sits at the centre of that effort. It connects Canada with roughly 170 markets and handled a record 170.4 million tonnes of cargo in 2025, including record crude-oil exports. Ottawa’s Port of Vancouver Gateway Strategy includes new bulk-terminal capacity, rail improvements and the proposed Roberts Bank Terminal 2 expansion. The container project is expected to raise port container capacity by 50% and unlock more than $100 billion in additional annual trade capacity if completed. Not every tonne will be energy, but the logic is the same: diversifying customers requires enough Canadian-controlled infrastructure to move commodities efficiently toward tidewater and onto world markets.
Building Around the U.S. Also Means Building Across Canada
The dependence on the United States is not limited to exports. Canada’s own energy system sometimes relies on infrastructure that crosses American territory. The Canada Energy Regulator notes that western Canadian crude reaches Ontario and Quebec through the Enbridge Mainline, which enters the United States in Manitoba, runs through the Midwest and then re-enters Canada at Sarnia. In 2024, flows into Sarnia averaged about 733,000 barrels per day. Central Canada also imports some U.S. crude and gas, meaning a disruption at the border can affect domestic supply as well as export revenue.
Electricity shows a similar north-south orientation. Canada exported 32.7 terawatt-hours of electricity to the United States in 2025 and imported 22.1 terawatt-hours, while having no international electricity trade with any other country. Ottawa’s 2026 National Electricity Strategy aims to double grid capacity by 2050 and strengthen east-west-north interties between provinces and territories. The goal is not to end beneficial U.S. power trade. It is to reduce fragmentation inside Canada so provinces have more domestic options during shortages, demand spikes or political disruptions. Energy sovereignty, in other words, requires internal connections as well as overseas export terminals.
Diversification Is Insurance, Not a Breakup With America
Even with new pipelines and LNG terminals, the United States will remain central to Canadian energy. In 2025, Canada supplied 63.4% of U.S. crude-oil imports, close to 100% of its imported natural gas and 81.3% of its imported electricity. Those numbers show why the relationship is mutually important, not simply a case of Canadian dependence. American refineries value heavy Canadian crude, cross-border gas systems balance regional demand, and integrated electricity markets help both countries manage reliability. Replacing that system wholesale would be costly and economically unnecessary.
The more realistic objective is optionality. The Canada Energy Regulator’s 2026 scenarios still show the U.S. as the main crude market for decades if existing infrastructure is used broadly as it is today. Its illustrative range puts global-market access for western Canadian crude at around 13% in 2025 and, without major new capacity changes, no more than roughly a quarter in its most diversification-friendly scenario later on. Projects such as TMX, LNG Canada and Pacific Link are therefore best understood as leverage and resilience. Canada does not need fewer American customers; it needs enough additional customers that no single government, border crossing or policy shock can dictate the value of its energy.
