Infrastructure high N. American energy priority, USEA panel says

Increasing and improving oil and gas transmission systems will need to be a top priority if North America is to take full advantage of its potential resources in Canada, Mexico, and the US, panelists said during the United States Energy Association’s 2013 annual meeting.

The proposed Keystone XL crude oil pipeline by itself won’t solve Alberta oil sands producers’ market access problems, noted Greg Stringham, the Canadian Association of Petroleum Producers’ vice-president of oil and sands and markets.

“We’ll need more ways to get our heavy oil to Gulf Coast refineries,” he said. “We also need to more light oil we’ve begun to produce from tight shale formations east to our own refineries as well as those on the US East Coast. Ultimately, Canada would like to begin selling more of its crude to China, India, and other industrializing countries.”

Canada also is considering converting lines that now ship gas into the US to crude for East Coast and California refineries, Stringham said. Crossborder infrastructure proposals for electricity as well as oil and gas undergo much more scrutiny now, he observed. Canada’s tight light crude production is expected to climb from 3 million b/d now to 6 million b/d by 2030, he said.

Mexico’s gas pipeline network has grown, but still is not adequate, according to Javier Humberto Estrada, assistant secretary for planning and energy information in the country’s Department of Energy. “We have only one trunk line connecting the northern and southern systems, for instance,” he said.

Examine infrastructure

Its recently adopted National Energy Strategy provides a framework for examining the issue of energy demand growing more quickly than either electricity or oil and gas production, Estrada said. “We need to examine the energy infrastructure we have, and what we’re going to need,” he maintained.

In addition to pipelines, the strategy identifies refining, oil production, and beginning a transition to alternatives as its main energy challenges, Estrada said. “Mexico will need to develop more of its deepwater crude, more tight oil, and more enhanced recovery,” he said.

It already has adopted reforms aimed at increasing investment from outside the country, and legislators continue to discuss ways to do more, he indicated. “In the areas where investments are possible, we’re talking about hundreds of billions of dollars in the next 10 years,” he said.

John C. Felmy, American Petroleum Institute chief economist, saw overcoming an epidemic of misinformation and distortions the biggest problem in the US since the country’s oil and gas outlook changed so dramatically.

“We need facts to drive the debate,” he said. “If we allow the street theater community to make us walk away from horizontal drilling and hydraulic fracturing, it would be a major crime. Policies will determine how much of these abundant resources we’ll produce. If they’re not the right kind, we won’t produce anything.”

Contact Nick Snow at nicks@pennwell.com.

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