The Weekly Brief: North American Integration

February 6, 2017 edition— US and Canada rig counts up; Mexico’s gas capacity opens; and Trump killed regulation.






Last Week in a Minute or Less



Renewables & Electricity. Nuevo Leon attracts US$35m in solar energy.


Natural Gas & Liquid Fuels. Mexico’s gas capacity to import from the US is open for everyone; the Atlantic Bridge natural gas project was okayed; and Deloitte studied global LNG opportunities.


Oil & Gas Upstream. US and Canada rig counts flourish and the Bank of Canada said pipeline construction is not enough to push up oil prices.


Money & Power. Tillerson was confirmed; energy regulations were cut; and the 20% border tax could favor Canadian oil and Gulf Coast refiners.


Déjà vu all over again. Last week’s readers were particularly interested in the Wilson Center’s analysis of North American energy (English); Sonora’s lithium production for electrical cars (Spanish); and the 350% rise in Mexico’s wind energy (Spanish).



Keeping Track of Trump


Tillerson was confirmed, Perry is next. The Senate confirmed Rex Tillerson, former Exxon Mobil CEO, as the 69th Secretary of State (English). On Jan. 31, a Senate panel signed off on Rick Perry’s nomination to direct the Department of Energy with 17 votes in favor and 6 against nomination (English).


Norman Bay says good-bye to the US Federal Energy Regulatory Commission. Norman Bay left the US Federal Energy Regulatory Commission (FERC) and the White House will soon nominate three Republicans to fill the commission’s positions (English). However, the approval of certain interstate natural gas projects may be delayed (English).


Trump cuts Obama’s energy regulations. President Donald Trump’s order to cut regulations ensures that agencies must kill two regulations for each new one (English). The House of Representatives ended two Obama-administration rules to end corruption in the extraction sector and to reduce stream pollution (English).


Trump’s 20% border tax might boost Canadian oil. Canada oilsands producers will beat Mexico’s suppliers in the US refining market if the border tax is approved (English). The border tax would apply to countries with a trade deficit with the US and that would exempt Canada.


Macro Trends


The US rig count surpassed the 700 mark… On January 29, oil prices fell after the news of a new increase in US drilling (English) (Spanish). The US drilling rig count reached 712 active units on Jan. 27, hitting OPEC’s and other producers’ plans to strengthen the market with a supply cut.


…and Canada’s rig count is at its highest in two years. In 2017, nearly 80% of the total wells in Canada will target crude oil and NGLs while 20% will focus on natural gas (English). Canada’s rig count is 345, including 200 oil and 145 gas rigs, the highest in the past two years (English) (English).


The Deloitte Center studied global LNG opportunities. The Deloitte Center forecast an important growth in global LNG supply and demand. That includes a rise in Canada’s supply and demand and growing US exports (English).


The Bank of Canada said pipeline construction is not enough. The Bank of Canada governor, Stephen Poloz, noted that pipeline construction could drive Canada’s economy, create jobs, reduce transportation costs and increase export capacity. However, these actions are not enough to offset the effects of a long-term drop in oil prices (English).



Cross-Border Flows


The border tax could hit global trade… Sean Spicer assured that the border tax is one idea for financing the wall among other options (English). A rise in imported goods’ prices could mean US customers would buy fewer foreign products and could lead to trade enforcement cases at the World Trade Organization (English).


…but could also favor Gulf Coast refiners. If the announced 20% border tax includes crude oil, the rise in fuel prices will hit East and West Coast refiners harder than those in the Gulf of Mexico (English). The border tax could also affect the trade map for global crude flows.


The Tech industry worried over Trump’s immigration order. After President Donald Trump’s executive order on immigration, the Netflix Chief Executive, Apple CEO, and Airbnb CEO, among others, expressed their disappointment with the policy (English). Google and Microsoft’s employees from the seven banned countries were warned not to leave the country.


Trump’s presidency drove a surge in remittances in December. Mexico’s remittances rose 6.2% in December compared to the same month in 2015 (English). The Finance Minister said Mexico will secure the free flow of remittances, after fears rose over the possibility of the Trump’s administration complicating the process of sending remittances (English).


Rail crude shipments roll toward the sunset. The authorization of new Canada and US oil pipelines threatened the long-term future of crude shipments by rail (English). The combined capacity of the new pipelines will amount 1.8 million barrels per day, while there was a drop in rail exports despite an increase in its capacity.



Infrastructure & Investment


TransCanada is hoping the second time is the charm for the Keystone XL pipeline. The Canadian corporation submitted a presidential permit application to the US Department of State to obtain the Keystone XL pipeline approval (English). President Donald Trump’s order allowed TransCanada to reapply for the pipeline’s permit after Barack Obama’s rejection for environmental concerns.


NEB was kept busy with the Enbridge Line 10 and Energy East Hearing. Canada’s National Energy Board (NEB) approved the segment replacement at the Enbridge Line 10 (English). The NEB voided all decisions made by the previous Energy East hearing panel and all decisions were taking out from the official record (English).


The Atlantic Bridge natural gas project was okayed. The Federal pipeline regulators authorized Spectra Energy to build the US$450m Atlantic Bridge project (English). The Atlantic Bridge will expand natural gas transportation from New Jersey to New England and Canada’s Maritimes,.


Mexico’s gas capacity is open for all! The Energy Regulatory Commission (CRE) announced that the pipelines used by Pemex and CFE to bring gas from the United States can now be used by private companies (Spanish). IEnova plans to compete with the biggest US gas suppliers for pipeline capacity (Spanish).


Nuevo Leon becomes an energy investment magnet. Nuevo León announced that companies including Fonroche, Howard Energy, and Iberdrola will make investments totaling 1.3bn in clean energy generation projects, hydrocarbon extraction and a pipeline (Spanish). The state will receive US$641m for a combined-cycle plant, US$35m for photovoltaic energy and US$500m for pipelines.



Old School Social


Events in the world beyond your screen – go see and be seen!


The Convergx Canada 2017 is February 7-9 in Calgary, Alberta.


The 13th Annual Nuclear Energy Conference is February 9-10 at Renaissance Washington, DC Downtown Hotel, Washington, DC.


The 2nd Annual Big Data, IOT & Machine Learning in Oil & Gas Canada 2017 is February 14-15 at Hotel Arts Calgary, Calgary.


The Mexico Energy Forum is February 15 at the Sheraton María Isabel Hotel, in Mexico City.


The NAPE Summit is February 15-17 at George R. Brown Convention Center, Houston, TX.


The Topsides, Platforms and Hulls is February 21-23 at the Ernest N. Morial Convention Center, New Orleans.


Lateral Thinking


The Wall could damage both bilateral relations and the planet. Besides harming US-Mexico relations, the construction of a wall could negatively affect the environment. The construction of a 1,600km wall requires 275 million cubic feet of concrete which would cause the  release of 1.9 million metric tons of carbon dioxide (English).



Quote of the Week


“Las masas humanas más peligrosas son aquellas en cuyas venas ha sido inyectado el veneno del miedo…. del miedo al cambio.”


“The most dangerous multitudes are the ones in whose veins the venom of fear has been injected…fear of change.”


-Octavio Paz (1914-1998) Mexican poet, writer, and Nobel prize winner



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