14-10-03 When the director of the energy program at the Washington-based Centre for Strategic and International Studies speaks to general American oil audiences, he always asks: Who supplies the most oil to the United States? Most guess Saudi Arabia.
"No, you are wrong," Robert Ebel responds. "It's Canada."

Indeed, Canada is the No. 1 supplier of oil and refined products to the United States, shipping 2 mm bpd, ahead of Saudi Arabia, Mexico and Venezuela. Canada also accounts for about 94 % of US imports of natural gas, shipping 9.6 bn cfpd.
But with heightened US concern about energy security and efforts to reduce supplies from volatile regions -- as exemplified in the sweeping energy bill before Congress -- the United States looks to Canada to expand energy trade to help meet its growing demand.
"For America, buying oil from Canada should be akin to buying a used pick-up truck from your brother-in-law," says Frederick Cedoz, an analyst with Washington-based energy strategy firm GWEST, in a recent report. "He might be cutting you a deal, and maybe you don't like the fact that he thinks the Edmonton Oilers are better than the New York Rangers, but you need the truck, he needs the money, and you are pretty sure that the other is not seeking your total annihilation."

At the same time, there are Canadian hopes that a federal leadership change will lead to more constructive government engagement in energy issues, an area that the feds have neglected since the disastrous 1980 National Energy Program. This new reality has many asking: Does this present an opportunity for Canadians to do more than just keep the taps open? What else can be done? Should government help make it happen?
"I think it's time we started comprehensively defining and reviewing the problem and therefore the opportunity," said energy lawyer Douglas Black, vice-chairman of Fraser Milner Casgrain.

With investment in Canada's energy sector at an all-time high, energy trade held up as a model of good Canada/US relations, and energy flowing unfettered between the two countries, it's hard to imagine what more could be done.
But, some say plenty. In fact, Canadian companies are already sniffing the upside. Oil pipeline giant Enbridge unveiled plans for two new oil pipelines worth more than $ 3 bn to find new markets for crude from the oil sands -- but also capitalize on American desire to replace declining domestic production with secure imports. Devon Energy played up the Alberta oilsands as a secure source of oil supply when it announced last month a $ 500 mm heavy oil project in Northern Alberta.

And security of supply is expected to figure prominently in future corporate investment decisions.
"Part of what we see here is an opportunity for vice-presidents and managers to go to their boards of directors and say: see this security issue, we have real security of demand here," said Bill Gwozd, vice-president at energy advisory firm Ziff Energy Group.
Mr Cedoz suggests that with the change in leadership in Ottawa, Canada should discuss a new trade agreement to secure long-term Canadian exports of oil sands oil. He floats ideas including a guaranteed price in exchange for secure oil sands supply.
"It is safe to say that American consumers would not balk at such a guaranteed price in exchange for knowing that the oil was coming from and supporting the economy of our largest trading partner," he writes.

Mr Black said there are opportunities for partnerships and strategic investments between Canadian and US industry players that could enhance Canadian energy development on many fronts -- in particular, oil and gas, and power generation. He said there are also opportunities to co-operate in research and development in areas like the oilsands, offshore exploration, and coal bed methane, in order to better exploit resources -- only a fraction of Canada's known oil and gas reserves can be produced using current technologies.
"We see opportunities for a number of our clients and we are talking to a number of our clients about what opportunities they see and what we see to be opportunities," he said. "And in terms of the business of law, we have a representative office in New York, and we are making regular monthly visits to Chicago, Houston, and L.A., with a view to talking about these types of issues."

Pierre Alvarez, president of the Canadian Association of Petroleum Producers, said many impediments to energy investment remain in Canada. "Where governments are involved in the sector it should be done in a smart way," Mr Alvarez said.

Indeed, the thinking feeds growing debate on whether Canada is ready for a new national energy policy. A sore subject still, after the NEP and more recently, Prime Minister Jean Chretien's ratification of the Kyoto Protocol on climate change, which outraged the industry.
"We've got high hopes that the federal government will look at working more closely with the provinces and territories and industry on developing an energy framework," said David MacInnis, president of the Canadian Energy Pipeline Association. "We're hoping people like Anne McLellan and Ralph Goodale, who have both been Natural Resources Ministers and are westerners and see the import of the industry to the country, and obviously to the west, will be able to help move that kind of thinking forward."

Mr MacInnis also articulates the industry's hopes for Paul Martin, expected to take over as Prime Minister early in the new year.
"Frankly we're very hopeful that Mr Martin will take a look at doing something to make the regulatory system more effective in protecting the environment and our social needs, but also make it more investment friendly."
Mr Black concurs an "energy blueprint" is needed, and should "be aggressively implemented." But, unlike the NEP, it should be born of federal-provincial and industry co-operation.
Mr Ebel suggests Canada develop its own energy policy, driven by its own concerns over secure supplies. Canada too is an oil importer, vulnerable to global oil shocks, he said.
"Canada doesn't stand in isolation from the rest of the world. It is vulnerable to any event, anywhere, any time, that impacts oil supply and demand."