Prime Minister Mark Carney has signed a deal with the province of Alberta that opens the door for an oil pipeline to the Pacific — a project long pushed by Canada’s oil heartland but one that faces significant hurdles before ever being built.

The energy accord, signed by Carney and Alberta Premier Danielle Smith in Calgary on Thursday, exempts the proposed pipeline from some federal environmental laws.

In exchange, Alberta must increase its carbon pricing and develop the world’s largest carbon capture programme to reduce its emissions.

The deal marks a historic reset between Alberta and Ottawa, but raises doubt on if the project could become a reality without buy-in from those opposed.

On Thursday, Smith called the deal “a first step” for its proposed pipeline project.

She added that it signals the end of “dark times” for her province, which she argued has been hampered by federal environmental laws from developing its resources

Carney, meanwhile, said he supports Alberta’s project as being crucial for the country’s economic development by helping sell more Canadian oil to Asian markets.

The US is currently the largest purchaser of Canadian crude oil, accounting for over 90% of exports, according to 2023 data by the Canada Energy Regulator.

Carney has said that Canada’s economic ties to the US have become a vulnerability in light of protectionist tariffs implemented by President Donald Trump, and that he aims to double non-US exports in the next decade.

The agreement signed by Carney and Smith exempts the proposed pipeline from a tanker ban off of BC’s coast, and commits to suspending a federal oil and gas emissions cap — a significant reversal from the policies of Carney’s predecessor, former Prime Minister Justin Trudeau.

It also spells out that the pipeline must have indigenous co-ownership and be financed by a private company, not tax dollars.

The deal adds that both Alberta and Ottawa will bring British Columbia (BC) “immediately” into a discussion on the project.

The Alberta government is the main proponent for the project, pledging C$14m ($10m; £7.5m) to put together a proposal that the province hopes will later be taken on by the private sector.

The plan is in its preliminary stages with no firm route yet identified, though it is expected to run through toBC’s northern coast.

BC Premier David Eby has been against the project, calling it “unacceptable” he was excluded from the talks leading up to the agreement.

Eby also expressed concern that an oil pipeline through BC could risk support from indigenous communities on liquified natural gas projects his province is pursuing.

He has called Alberta’s pipeline “fictional”, noting that no private company has stepped up to finance it.

The project has also been opposed by some indigenous and environmental groups. A group representing Coastal First Nations in BC said in a statement on Wednesday that an oil pipeline to the province’s northern coast “will never happen”.

The Montreal Economic Institute, a Quebec-based non-profit think tank, called the agreement “a clear change to Ottawa’s long-standing hostility to pipelines”, but it expressed doubt that the proposed pipeline will become a reality.

“Premier Eby seems adamant that he’ll reject any such project, so unless he decides not to use his veto, a new pipeline will remain a pipedream,” said EMI senior policy analyst Gabriel Giguère.

Conservative leader Pierre Poilievre said the memorandum only kickstarts a lengthy process that does not ensure its completion.

“This from a Prime Minister who promised during the election to move with ‘unimaginable speed,'” the opposition leader said.

Meanwhile, a left-leaning New Democratic Party MP called the agreement “apalling” and “disrespectful” to BC and its indigenous communities.

“Right now, if you’re a Liberal from coastal British Columbia, you should be very deeply concerned,” said NDP MP Gord Johns, who represents a constituency on Vancouver Island.