America’s trade hostility and war in the Middle East could fuel a renaissance up north Canada wants to become an energy superpower. If it has the will, there is a way. The country is the world’s fourth-largest oil producer and fifth-largest natural-gas producer.

The oil-and-gas sector represents about a fifth of the country’s exports, making it the largest contributor, according to Statistics Canada. But it sends nearly all of its natural-gas exports and about 90% of crude-oil exports to the U.S., limiting its global influence. President Trump’s trade war and the Iran conflict have ignited Canada’s ambition to diversify its energy exports.

America’s push to import more Venezuelan oil, a heavy grade that competes with the Canadian kind, is another reason for Canada to look beyond its neighbor. Asian refiners are among those that might want to diversify their crude sources as a result of the instability in the Middle East. Global refining capacity that can process ultraheavy crude is split roughly evenly between the U.S. Gulf Coast and Asia, according to Jonah Resnick, analyst at Wood Mackenzie.

Canada’s energy inertia has been, in part, market-driven. Rapid U.S. shale growth had pushed oil prices down and stymied Canadian oil sands’ growth plans over the past decade. But policy was also to blame, making it more difficult to build the infrastructure needed to serve markets other than the U.S. "Previously, infrastructure and resource development had really stalled out due to regulatory and permitting uncertainty," said Robert Kwan, equity analyst at RBC Capital Markets.

Today, both of those forces are moving in the other direction. "We are unleashing our full potential as an energy superpower," Prime Minister Mark Carney said at the Canada Investment Summit earlier this month. He pointed to a project—the West Coast Pipeline—that would carry oil to Asian markets, and to LNG export projects that would double the country’s liquefied-natural-gas exports by 2030. The government is pushing to simplify the permitting process for such infrastructure.

Carney has said that he aims to narrow the review process for projects and shorten the process to one year. Historically, reviews of large infrastructure projects have taken two to three years or more, according to Resnick. Canada is also introducing investment incentives, including a federal tax deduction that will allow oil-and-gas companies to write off the full cost of new wells, pipelines and processing facilities.

This would take the deduction rates, which currently range from 25% to 30%, to 100% on new projects, according to a report from BMO Capital Markets. The report estimates that the deduction could improve oil producers’ cash flow per share by 6% on average. In addition, the Alberta government is planning to revise its oil royalty-fee structure to encourage more investment in production, according to local news reports.

These projects have the potential to meaningfully wean Canada from the U.S. TD Economics estimates that if all of Canada’s major oil pipeline projects and expansions are built, there could be 6.8 million barrels a day of total takeaway capacity by 2034. Of that capacity, some 30% would take oil to the West Coast, which has access to Asian markets. The actual share of oil going to Asia would be lower because westbound pipelines also carry oil to local refining capacity and the U.S. West Coast.

Nevertheless, it would be a meaningful jump from today’s levels. Proposed LNG export projects could enable Canada to send 55% of its natural-gas exports to non-U.S. markets by the early to mid-2030s, according to the government’s estimate. This could be a boon for Canada’s natural-gas producers, who have been producing too much natural gas as a consequence of drilling for condensate.

Condensate is used to dilute oil sands’ output, which can be as thick as peanut butter. As more LNG export capacity is built, Canadian natural-gas prices could double by the late 2020s, according to...