The move dulls hopes of pipelines from the Alberta oil sands fields to the Pacific coast, just a week after Keystone XL was also killed off.
Trudeau released letter of instructions to his ministers on Friday after a little more than a week in office, telling his transport minister Marc Garneau to ban oil tanker traffic, a move that kills Enbridge's proposed Northern Gateway pipeline, which would have taken diluted bitumen to a proposed export terminal.
The moratorium makes official a non-binding motion the House of Commons passed in 2010, claiming the areas around Douglas Sound are too ecologically sensitive to risk.
The 1177km-long Northern Gateway pipeline would stretch from east Alberta to Kitimat, close to Woodside Petroleum's proposed LNG hub, and would carry 525,000bpd of diluted bitumen, which would then be shipped out the narrow Douglas Channel to world markets.
It remains to be seen what oil and gas activities will be permitted and which communities could be affected.
Enbridge, however, says it intends to continue with its planning, telling the Canadian government that it had no choice but to engage with the pipeline company in "required consultation" given the potential economic impact a crude oil tanker ban would have on those communities and Western Canada as a whole.
The statement could herald a legal challenge, but Enbridge said wants to talk with the new Liberal Party leadership.
Northern Gateway received conditional approval under former prime minister Stephen Harper last year, following the National Energy Board's careful examination of the project, one of the most exhaustive reviews of its kind in Canadian history.
The project already faces intense resistance from local communities over concerns including potential spills that could harm fisheries and threaten their livelihood.
But the Canadian Association of Petroleum Producers says oil producers need market access for "responsibly produced" crude, and cannot continue to have projects such as the Northern Gateway or Keystone XL shut down.
There are four pipelines from Alberta on the table: Keystone XL to the US, Northern Gateway, Trans Mountain, which would transport crude through British Columbia to the Pacific, and Energy East would move 1.1MMbopd through six provinces to the Atlantic over 4200km.
Keystone has been kyboshed by the Democrats in the US, while it, Trans Mountain and East Energy have nominal support from Trudeau's government.
During the election campaign Trudeau refused consider is Northern Gateway because he doesn't think British Columbia's northern coastline is suitable for tanker traffic.
Kinder Morgan's Trans Mountain, which will also head to BC, would be different, because it would be the expansion of a 60-year-old pipeline.
Some 980km of new pipeline is planned to be built between Alberta to near Vancouver, far from ecologically sensitive areas.
Pipeline access is vital for the high cost oil sands industry to function and CAPP says that accelerating the construction of new oil pipelines should be a top priority for the Canadian government, to make oil sands more competitive.
Hard-hit Canadian energy producers, coming off a bleak earnings season, are signalling they will cut capital spending for a second straight year in 2016.
The seven biggest Canadian producers cut 2015 capital spending by 39%, or a combined C$12B, from last year, and could cut their costs by 10-20% next year to adjust to the new reality of $C40/bbl oil.
Oil sands expansions are already being scrapped, leading to some suggestions that there is no urgency to build such an expansive pipeline network.
Shell recently stopped development of its 80,000bopd Carmon Creek project, while other projects expected to supply the pipelines, such as the Pierre River and Joslyn North mines, have also been put on ice because they no longer make economic sense in a world where oil sands projects they require $US80/bbl to break even.
Overall, some $60 billion in Canadian oil sands projects are in big trouble, unable to withstand high production costs in today's slumping oil price market.
Trudeau has also instructed his natural resources minister, James Carr, to "modernise" Canada's independent pipeline regulator, so the Calgary-based National Energy Board has a balanced representation from across the country, as well as sufficient expertise in environmental science, community development and indigenous traditional knowledge.
The NEB has been criticised for as lacking scope in recent years, and as being too close to the industry it is expected to regulate.
Other letters to ministers require the restoration of environmental legislation that was changed by the previous Conservative government.
Some of the instructions call for restoring legal protection for bodies of water that would, as a result, increase responsibilities for pipeline operators and other industries.
It was not immediately clear whether the government's legislative review would delay ongoing environmental assessments.
