US energy self-sufficiency poses challenges for Canadian exporters, overseas markets

US energy self-sufficiency, resulting from the shale gas and oil boom, could cause a potential rift in US-Canada relations, the World Energy Congress was told on 15 October.

There were also indications of rising concern that an environmentally conscious and energy-rich United States may no longer be keen to commit to major infrastructure projects needed to export oil and gas to markets outside North America.

“If I had said five years ago that the United States would become energy self-sufficient by 2020, I would have lost my job,” said Barry Worthington, Executive Director of the United States Energy Association (USEA).

Ken Hughes, Minister of Energy for Alberta, responded that while he is “happy to see America achieve energy self-sufficiency, it is strategically imperative for us to get our products to market.” Hughes was referring to delays in approval for the construction of the Keystone pipeline, a project designed to deliver oil from Canada to refineries in the United States for both the US and overseas markets.

US environmental groups have opposed construction of the pipeline saying that it threatens wildlife habitats. The prospect of energy self-sufficiency has also made the work of pipeline proponents more difficult given the perception that the US will no longer be dependent on oil imported from Canada. President Obama has delayed granting approval for the Keystone pending the outcome of an environment-related investigation.

In response to the concerns of environmentalist groups, Hughes and Rich Coleman, his counterpart from British Columbia, listed actions the two Canadian provinces have taken to extract energy resources in an environmentally conscious manner. “We are very proud of our high environmental and safety standards,” said Coleman, British Columbia’s Minister of Natural Gas Development. “We have never had a wellhead burst and we have never contaminated ground water. We are proud of the companies we have attracted. We wish to help other countries improve their economies and balance sheets.” Hughes added that Alberta has set aside funds for greenhouse gas research. “We are in favor of the Keystone,” said Hughes. “There are already many pipelines across the US-Canada border. We need pipelines in all directions in order to assure efficiency. This is a political battle over which gravity has no grip.”

The Keystone pipeline received support from Mike MacSween, Executive Vice President of Suncor Energy, a Canadian energy conglomerate, and Osmar Abib, Global Head of Oil and Gas & Co-head of Global Energy at Credit Suisse. Referring to the free movement of energy supplies across the US-Canada border, MacSween said, “The reason we are successful is we are integrated. In the absence of efficiency market forces come into play.” Abib said, “The pipeline should be approved. It is also a security issue. If the United States cannot get oil via the Keystone, it will have to import it from somewhere else. The world is not short of capital. It is short of ideas.”

Responding to concerns voiced by energy-importing countries that stepped up environmentalist activity supported by the specter of US energy self-sufficiency could result in reluctance on the part of the US to engage in future infrastructure projects needed to export surplus oil and gas to foreign markets, Matthew Mead, Governor of the energy-rich state of Wyoming said, “There are a lot of people overseas who need energy. We are not in a position to say that we want to export this but not that. Energy is more than just dollars and cents.” Wyoming has the second largest gas reserves in the US after Texas and the second largest coal reserves after Montana. The state is number eight in oil production.

This news story is based on the session Regional Crossroads, “North America: Energy self-sufficiency by 2025?” at 2013 World Energy Congress.