By Paul Vieira

OTTAWA--The Canadian federal government and the oil-rich province of Alberta agreed Thursday to support a new crude-carrying pipeline that aims to carry about one million barrels of oil daily to the Pacific coast via southwest British Columbia.

Prime Minister Mark Carney added that Ottawa, Alberta and Canada's biggest oil producers have agreed to the terms to begin construction of a carbon-capture and storage facility, which the Canadian leader said was required for Ottawa's endorsement of the new energy corridor.

Alberta Premier Danielle Smith had previously said she would submit a pipeline proposal to the federal government on or around July 1. The big surprise is that Carney has agreed to co-back the project, through the state-owned Trans Mountain Corporation, which already owns and operates a pipeline connecting Alberta and the Pacific Coast.

Calgary, Alberta-based Pembina Pipeline will hold a 10% interest in the Canada-Alberta project, and contribute expertise on the new corridor's construction.

"This is not another energy project, it's a nation-building project," said Danielle Smith, at a press conference in Calgary that Carney also attended. She said this marked a high-level agreement, with more details subject to negotiation.

Smith unveiled her intentions to champion a new pipeline in October last year, arguing that Alberta needed to take charge because of the lack of private-sector interest. Smith said companies were reluctant to take on such a project due to regulatory risk stemming from previous policies implemented by Carney's predecessor, former Prime Minister Justin Trudeau.

"This is not an expenditure. It's an investment for the benefit of all Canadians," Carney said.

Smith has said a new pipeline is a litmus test for Canada's ability to collaborate on economic initiatives that improve Western Canada's prospects and help the country diversify exports to non-U.S. markets. Alberta is slated to hold a referendum this fall about its future within Canada, as a segment of the population is pushing for independence after decades of frustration with federal environmental policies.

Earlier this week, Carney said his Liberal government needed to pivot from the environment policy implemented in the past decade. He said Canada had to capitalize on its oil and gas reserves, given increasing demand from countries leery of solely relying on the Middle East after the recent U.S.-Iran conflict.

Write to Paul Vieira at paul.vieira@wsj.com