Energy Opportunity Amid Global Conflict: Can Canada Meet the Moment?

What You Need to Know:

• Global energy markets have been reset by rising energy security concerns since the U.S.-Israel strikes on Iran.
• Canada could meet the moment as policy is improving with a regulatory reset that restores the preconditions for investment.
• In an accelerating growth environment, we favour indirect midstream beneficiaries of rising throughput and egress expansion.
• We also recommend heavy oil and condensate-exposed producers as well as select industrials with early cycle exposure

The TD Cowen Insight

We are raising our valuation assumptions for Canadian Energy Infrastructure following the U.S.-Israel strikes on Iran and improving Canadian policy support. We see a stronger production outlook emerging, supporting midstream growth opportunities and sustained valuation strength.

Our Thesis

The U.S.-Israel strikes on Iran and disruptions at the Strait of Hormuz have elevated global energy security concerns. Even if tensions ease, supply reliability and jurisdictional stability have moved from secondary considerations to primary drivers of energy trade and investment decisions.

Against that backdrop, Canada’s energy industry has taken on renewed strategic relevance. Canadian oil and gas supply offers long reserve lives, low decline rates and scale that supports multi-decade planning. Canada is positioned to play a more visible role in global energy flows.

This global opportunity intersects with a more challenging domestic economic reality. Canada’s Gross Domestic Product (GDP) growth on a per-capita basis has lagged that of peers for much of the past decade, underscoring the limits of population-driven growth absent productivity and capital investment. At the same time, Canada’s reliance on a single dominant trading partner has become a more meaningful constraint as trade frictions, tariff risk and policy uncertainty with the U.S. complicate long-term planning. In this context, energy—Canada’s largest exporting sector—has re-emerged as a central lever for investment, growth and economic relevance.

Can Canada Use Its Unique Geopolitical Position to Attract Growth?

This sets up the central question of this report: can Canada meet the moment? Specifically, can heightened geopolitical relevance and domestic economic necessity be translated into buildable, investable infrastructure outcomes in Canada that attract capital and support durable growth?

The introduction of the Building Canada Act meaningfully shifts the policy backdrop for largescale energy infrastructure by improving regulatory sequencing and late-stage certainty. Combined with higher utilization across existing systems, renewed export relevance and a more coordinated regulatory framework, Canada’s energy sector appears to be approaching an inflection point after a prolonged period of underinvestment and sub-trend growth. Not every project will qualify, and discipline remains essential, but for the right projects operating within a more supportive framework, the answer to whether Canada can meet the moment is increasingly "yes" in our view.

What Could Come Next for Canada's Energy Infrastructure?

The implication is that the broader Canadian energy sector is entering a new investment paradigm with direct consequences for energy infrastructure companies. As countries seek to diversify supply and place greater value on reliable, long-duration sources of heavy oil and natural gas, Canada’s production base becomes more strategically relevant.

At the same time, higher producer valuations and improved egress visibility have begun to shift the relative attractiveness of deploying incremental capital toward accretive growth alongside shareholder returns. With a potential inflection in production growth rates, volumes increasingly push through existing systems, lifting utilization and reintroducing selective congestion.

For energy infrastructure companies, this backdrop creates a broader and more durable opportunity set tied to higher system throughput and incremental balance tightening. It's also linked with the renewed need to move and manage growing volumes across both existing and potentially new networks. Built upon our base case assumptions and proprietary bottom-up production forecasts, we believe base case production growth rates between now and the end of the decade are trending modestly higher, and that this will continue in the near to medium term as egress growth becomes more derisked.

TD Cowen Base Case End-of-Decade Production Growth Forecasts

These production growth forecasts represent our high-conviction, base case assumptions and are modestly higher versus our previous forecasts.