It’s no secret that Canada is one of the most resource-rich countries in the world, especially when it comes to energy. However, for years now, Canada’s oil and gas sector has struggled with one major issue: infrastructure.
Limited pipeline capacity and export options meant producers were often forced to sell their oil at discounted prices, largely relying on the U.S. as their primary buyer. And over time, that has put pressure on the entire industry’s economics.
However, that environment may finally be starting to shift.
In fact, just last week, Prime Minister Mark Carney and Alberta Premier Danielle Smith reached an industrial carbon pricing agreement that could help pave the way for future pipeline development in addition to broader energy infrastructure investment across Canada.
At the same time, LNG development continues to ramp up as pressure grows to diversify exports beyond the U.S.
And that’s what makes this moment so important and such a significant opportunity for investors to buy now, before the market fully prices in the potential benefits of Canada’s infrastructure boom.
While many investors will focus on pipeline companies and other energy infrastructure companies as new projects are announced, the bigger opportunity may actually be with producers that benefit from stronger industry economics.
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Why improving infrastructure matters for producers
Canada’s infrastructure constraints haven’t just been a minor inconvenience. They’ve had a meaningful impact on the entire sector. Because when producers don’t have enough access to global markets, they lose pricing power.
That’s one of the reasons Canadian crude has historically traded at a discount compared to global benchmarks. But we’ve already started to see what happens when that constraint begins to ease.
For example, since the Trans Mountain Expansion entered service, Canadian producers have gained greater access to international markets rather than relying almost entirely on the United States. At times, that’s helped narrow the discount on Western Canadian Select and improve overall market access.
And with LNG Canada and other export projects continuing to advance, there’s growing evidence that Canada could still be in the early stages of a much broader infrastructure boom.
That matters because better infrastructure doesn’t just benefit the companies building pipelines or export facilities. It also improves realized pricing, strengthens margins, and increases long-term cash flow potential for producers across the sector.
Why this energy stock is a top pick ahead of Canada’s infrastructure boom
Since new infrastructure projects have the potential to benefit producers significantly over the long haul, one of the best stocks to buy now is Canadian Natural Resources (TSX: CNQ).
Even without a major shift in infrastructure, CNQ is already a high-quality long-term investment. The company has massive, long-life assets, generates significant free cash flow, and has a long track record of returning capital to shareholders through both dividends and buybacks.
It’s also one of the most operationally efficient producers in Canada and continues to trade at a reasonable valuation relative to its earnings power.
But the real upside comes from how it could benefit if industry conditions continue to improve. For example, as Canada continues expanding its export capacity during the infrastructure boom and improving access to global markets for producers, companies like CNQ could see better realized pricing and stronger profitability over time.
Furthermore, because CNQ already operates efficiently and generates strong cash flow, even modest improvements in industry economics can have a significant impact on earnings growth.
That’s what makes now the time to invest, before Canada’s infrastructure buildout fully takes effect.
The Foolish takeaway
Canada’s energy infrastructure outlook isn’t just starting to change; it already is. Between growing LNG development, improving political alignment, and increasing pressure to diversify exports, the industry is overdue for significant investment.
And while pipeline companies will undoubtedly benefit from that shift, some of the biggest long-term winners could be the producers themselves.
Because as market access improves, so do pricing, margins, and long-term cash flow potential. That’s why this isn’t just about what’s happening today, it’s about where the industry is heading and why the time to invest in Canada’s infrastructure boom is now.
