Plains All American Pipeline (PAA) has always been a behemoth in the North American energy infrastructure space, known for its sprawling network of pipelines and terminals. But buried within their Q1 2024 earnings call lies a subtle shift, a hint of a strategic pivot that could reshape their future and unlock significant value for investors. While analysts have focused on the Permian re-contracting and its impact on 2026 EBITDA, a closer look at PAA's Canadian operations reveals a potential growth engine being deliberately kept under wraps.

PAA's narrative for 2026 is one of "broadly flat" Crude segment EBITDA. This cautious projection accounts for lower contracted rates in the Permian after 2025. However, the company simultaneously emphasizes that this forecast assumes "no significant changes" from their current operations and doesn't factor in "large investments." This wording leaves a tantalizing gap, a strategic grey area where PAA can maneuver.

Enter the Canadian assets. The earnings call makes multiple references to the impending startup of the Trans Mountain Expansion (TMX) pipeline and its expected impact. TMX, by redirecting a substantial volume of Canadian crude towards the West Coast, is anticipated to temporarily compress market-based opportunities for PAA in the near term. This is explicitly factored into their "broadly flat" 2026 outlook.

However, the narrative takes a fascinating turn when PAA's executives discuss the long-term implications of TMX. They repeatedly highlight that this new pipeline, by improving Canadian crude access to global markets, will ultimately incentivize *increased production* in the region. They anticipate a "constrained environment" in two to three years, implying a resurgence of high-demand scenarios for Canadian crude takeaway capacity.

"This is where PAA's "broadly flat" 2026 projection starts to look more like a strategic smokescreen. While acknowledging the temporary dip in market-based opportunities, they simultaneously emphasize the positive long-term implications for their Canadian assets. Notably, they point out potential for "higher tariff-based opportunities" arising from increased Canadian production."

The numbers tell an intriguing story as well. In Q4 2023, PAA reported strong EBITDA growth driven by "Canadian market-based opportunities." They also completed a divestiture of their interest in a Canadian fractionation facility, freeing up capital for further strategic moves. Combine this with the recent acquisition of an additional 10% interest in the Saddlehorn Pipeline, a key conduit for Canadian crude, and a picture begins to emerge.

The Hypothesis:

Plains All American is positioning itself to capitalize on the production boom they anticipate in Canada, fueled by TMX unlocking global market access. Their "broadly flat" 2026 EBITDA forecast strategically downplays this potential, allowing them to secure assets at attractive valuations while generating significant free cash flow.

The Evidence:

Repeated emphasis on TMX-driven production growth in Canada: This is a recurring theme throughout the earnings call, highlighting an opportunity they clearly see as significant. (Source)

Acquisition of additional Saddlehorn Pipeline interest: This strategic move increases their exposure to Canadian crude flows. (Source)

Divestiture of Canadian fractionation facility: This frees up capital for potential future investments in Canadian crude takeaway capacity. (Source)

Strong Q4 2023 EBITDA driven by "Canadian market-based opportunities": Demonstrates their ability to capitalize on Canadian crude dynamics. (Source)

Projected Permian Crude Oil Production Growth

The following chart illustrates Plains All American's projected Permian crude oil production growth from Q4 2023 through 2024.

PAA has a history of playing the long game, making strategic moves that pay off over time. Their recent actions suggest a calculated bet on Canadian crude, one that could transform their portfolio and reward investors seeking long-term value creation. While the 2026 outlook may appear "broadly flat" on the surface, the Canadian undercurrent could be a powerful force propelling PAA towards a new era of growth.

"Fun Fact: Plains All American Pipeline's network is so vast it could circle the Earth nearly twice! And they handle enough crude oil daily to fill over 100 Olympic-sized swimming pools."