|
NAFTA working group points to declining energy self-sufficiency Trilateral study projects strong gains in Canadian and Mexican gas output and some growth in U.S. oil output by 2010 as per capita consumption grows by 10% Gary Park PNA Canadian Correspondent
A working group of U.S., Canadian and Mexican government officials, set up a year ago to advance energy cooperation among the North American Free Trade Agreement partners, has forecast eight years of rising natural gas production in Mexico and Canada and a sharp drop in U.S. oil volumes, partly offset by a rise in gas production.
The North American Energy Working Group was established to build on energy delivery connections and maximize trade in the three countries, whose voracious appetite consumes about 30 percent of worldwide commercial energy while producing about 25 percent.
Its first report — delivered last month to U.S. Energy Secretary Spencer Abraham, Canada’s Natural Resources Minister Herb Dhaliwal and Mexican Energy Secretary Ernesto Martens — delved into supply and demand trends, energy forecasts and details of infrastructure, laws and regulations.
Dhaliwal said the efforts highlighted “the cooperative spirit that exists among our three countries to share information and improve out collective understanding of the distinct energy capacities of our three countries.”
North American demand more than 30% With only 7 percent of the global population, the report noted that North America’s demand represents 31 percent of world oil, 31 percent of natural gas, 24 percent of coal and 30 percent of electricity.
The per capita energy consumption for the three countries was about 4.5 times greater than the world average and was projected to expand by 10 percent by 2010.
On the production front, North America delivered 19 percent of world oil, 31 percent of gas, 25 percent of coal and 32 percent of electricity.
The wake-up call was contained in the expected decline in production over the next eight years to 17 percent of oil, 28 percent of gas and 24 percent of coal.
Reserves, production, dependence In capsule form, the working group report said:
• North America has reserves of about 50 billion barrels of conventional crude and 290 trillion cubic feet of gas — 5 percent of the world’s oil and 6 percent of its gas.
• For the United States, based on Energy Information Administration low- and high-case production scenarios, crude oil and natural gas liquids production could fall to between 7.39 million and 7.54 million barrels per day from 8.11 million bpd in 2000. But gas output is expected to rise to between 22.97 tcf and 24.05 tcf a year in 2010 from 19.40 tcf a year in 2000.
• The U.S. dependence on imports means 27 percent of net energy imports came from Canada in 2000 and 9 percent from Mexico, with more than half of Canada’s oil and gas flowing south.
• The United States is estimated to hold 167 tcf of gas reserves, compared with Canada’s 92 tcf and Mexico’s 30 tcf. Of oil reserves, the United States was pegged at 22 billion barrels, Mexico at 24 billion and Canada at 4.4 billion, but the working group observed that Canada has 308 billion barrels of economically recoverable oil sands reserves.
Canadian synthetic crude production to increase • Canadian crude oil output is forecast to grow to 3.08 million bpd in 2010 from 2.20 million bpd in 2000. Conventional crude is projected to decline to 746,000 bpd over the period from 832,000 bpd and conventional heavy oil to slip to 496,000 bpd from 560,000 bpd. But synthetic crude from the oil sands will rise to 768,000 bpd from 320,000 bpd, in-situ recovery of deeply buried bitumen deposits to 462,000 bpd from 288,000 bpd and natural gas liquids output to grow to 611,000 bpd from 552,000 bpd. Total Canadian gas production is expected to rise to 7.05 tcf a year for 2010 from 5.92 tcf a year in 2000.
• For Mexico, oil and liquids output is projected at 4.62 million bpd in 2010, compared with 3.45 million bpd in 2000, while gas volumes should almost double over the same years to 3.18 tcf a year from 1.71 trillion tcf.
Gas investment needed The working group concluded that the intensity of gas utilization in the NAFTA countries will continue to place heavy importance on investment and development of infrastructure. It said gas infrastructure has grown significantly in the United States with the development of pipelines and storage facilities for the operating hubs.
The report said the Henry Hub in Louisiana has extended its reach into many gas market centers in Canada and the United States and the various “trading points” that increasingly rely on auction prices rather than long-term contracts.
The working group findings are reflected in a Natural Resources Canada review of the continental gas market that was released on July 8.
The annual report says the gas sector is poised for long-term growth regardless of recent price volatility, with Canadian exports forecast to grow by 25 percent to 4.4 trillion cubic feet a year by 2010.
Natural Resources Canada said current market conditions are ripe for periodic setbacks as markets struggle to make a comeback from the unprecedented price spikes in 2000-01, along with a 5 percent shrinkage in North American demand last year.
| 