US has need for integration of North American energy markets

Nov 27, 2001 01:00 AM

The Sept. 11 terrorist attacks on the US further underscore the need for integration of North American energy markets and a "seamless" border, says a senior US energy official. Vicky Bailey, an assistant secretary of energy, said open and smoothly functioning markets are essential in the face of the uncertainties of the war against terrorism.
Bailey told a conference in Calgary that potentially tight oil, natural gas, and electricity markets and the onset of the winter heating season make continental cooperation even more imperative. She said the US and Canada are moving toward a seamless and transparent trading relationship, where borders are being virtually eliminated and where there are streamlined procedures to facilitate greater integration.
Bailey noted that Canada and the US are already each other's largest trading partners, with trade valued at $ 400 bn in 2000. Canada, she said, is already the leading foreign supplier of oil, natural gas, and electricity to the US. She said the energy trade of the two nations is supported by 35 cross-border gas pipelines, 22 oil and petroleum product lines, and 51 electric transmission lines.

Bailey said the energy strategy that the Bush administration proposed in May confronts increasing US dependence on foreign energy supplies by calling for increased domestic production with advanced technologies that can dramatically reduce environmental impacts. She said US demand for oil is expected to rise by a third in the next 2 decades, while US production has fallen 39 % since 1970.
Demand for natural gas is projected to increase 62 % in the same period, and electricity demand by 45 %. Bailey said the US cannot address its energy concerns alone, and its energy security is intricately linked to the international market.
"President Bush is committed to working with Canada and other countries, particularly in our hemisphere, to strengthen and create energy partnerships," Bailey said. "US energy security will continue to depend on supplies from outside our borders. We are fortunate to have a reliable North American partner that supplies a significant part of our energy requirements."
Bailey said that one of the key elements of the Bush energy plan is the trilateral North American Energy Working Group, which she co-chairs. The group is supplementing existing bilateral efforts to promote a more fully integrated energy market.

The energy official said inclusion of Mexico in the group is important for both the US and Canada. "As new gas-fired generating plants are constructed, Mexico's gas demand is expected to increase at nearly double-digit annual rates for the next decade. Mexico imports 15 % of its gas needs, and recently indicated that, if domestic production does not increase above current rates, it will be importing 30 % of its gas by 2010," Bailey said. "That could mean imports would rise from 250 mm cfpd in 2000 to 2.2 bn cfpd by 2006. Clearly, those forecasts have implications for the US and Canada as well as the continental energy market."

Source: Oil & Gas Journal
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