By an OGJ Online Correspondent
CALGARY, Nov. 6 -- The events of Sept.11 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 Energy Secretary, said open and smoothly functioning markets are essential in the face of the uncertainties of the war against terrorism.
Bailey told a Ziff Energy Group 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.
The US official 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 billion US in 2000, or more than $1.4 billion/day. Canada, she said, is already the leading supplier of imported 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.
"Bilaterally, we value and depend on Canada as a free trader and we welcome opportunities for increased investment between our countries," Bailey said.
"True to the spirit of the US-Canada Free Trade Agreement and the North American Free Trade Agreement, Canada can also depend on a reliable, open US market for its growing trade and investment ties."
Bailey said the energy strategy that the Bush administration proposed in May confronts increasing US dependency on foreign sources of energy by calling for increased domestic production with advanced technologies that can dramatically reduce environmental impacts. She said 60% of a projected supply/demand gap projected in 2020 would be offset by conservation actions.
Bailey said the US demand for oil is expected to rise by a third in the next two 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 one of the key elements of the Bush energy plan is the North American Energy Working Group, which she co-chairs. The trilateral group involving the US, Canada, and Mexico 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 MMcfd in 2000 to 2.2 bcfd by 2006. Clearly, those forecasts have implications for the US and Canada as well as the continental energy market."
