The Weekly Brief: North American Integration

January 23, 2017 edition— Dispute over Canada’s oilsands; New York bets on wind; and Mexico, on sun.





Last Week in a Minute or Less


Renewables & Electricity. New York presents the US’s biggest offshore wind project; MidAmerican Energy will build two wind farms in Iowa; and Mexico’s solar energy will attract MXN200bn.


Natural Gas & Liquid Fuels. Natural gas prices will jump 40%; Mexico-US border oil prices won’t match; and US ethane exports will rise.


Oil & Gas Upstream. Trump assures that federal lands will be opened again and Trudeau threatened Alberta’s oilsands.


Money & Power. The IMF upped its outlook for US and Canadian economic growth, but lowered Mexico’s; Tillerson will back the Paris Accord and Trump will announce decisions on NAFTA and TPP right after the inauguration.


Déjà vu all over again. Last week’s readers were particularly interested in the tense relationship between Trump and Toyota (English); natural gas production (English); and AltaGas’s propane export terminal (English).



Keeping Track of Trump


Tillerson will stick to the Paris Accord… At his Senate confirmation hearing, the Secretary of State nominee Rex Tillerson asserted that the US should back the Paris agreement (English). His position contrasts with President Donald Trump’s stated intention to break with the agreement.


…and Trump’s pick for DOE backs down too. During his Senate confirmation hearing, Rick Perry, President Trump’s choice to lead the Department of Energy, acknowledged that “man-made activity” have caused global warming (English). Perry also said that fighting global warming should not be detrimental to US economic growth.


Federal land is back on the menu. President Trump said remove former President Obama’s limitations on drilling on federal lands (English). Before tapping for oil and gas, however, private companies will have to fight environmental and conservation groups opposed to further exploitation.


Trump’s border tax may hit Canada too. The Trump administration assured that the auto border tax is not specific to any country but to prevent companies from moving abroad (English). A tax on imports would hit Canada harder because the links between the northern neighbors are stronger.



Macro Trends


Natural gas prices will skyrocket by 40% in 2017. According to the US Energy Information Administration, international natural gas prices will increase 40% in 2017 compared to 2016 average, to 3.55 dollars per MMBTU from 2.51 dollars (English). US natural gas exports to Mexico totaled 87% of all US exports in 2016.


The OPEC agreement is looking doubtful. Increasing US production and Saudi Arabia’s view that further cuts are unnecessary to maintain market equilibrium will kill OPEC’s agreement by June (Spanish) (English). The US Energy Information Administration forecasts a slight increase in oil prices in 2017 and 2018 (English).


Ups and downs in the IMF’s economic growth outlook for North America. The International Monetary Fund forecast stronger and higher than expected economic growth in the US and Canada, reaching 3.4% and 1.9% respectively (English) (English). Mexico was not so lucky, finding its economic growth outlook reduced to 1.7% (English).


Just after the inauguration, Trump will decide on NAFTA and TPP. Without waiting for Congress to confirm trade officials, President Trump will announce after the inauguration his withdrawal from the Trans-Pacific Partnership and NAFTA’s renegotiation (English). The original US NAFTA negotiator said NAFTA should be expanded to include more industries, not destroyed (English).



Cross-Border Flows


Congress can make it harder for H-1B visas. Foreign workers in technology jobs have to look for a raise to at least US$100,000 annually to remain in the US (English). Congress will have to vote on the bill, rising the minimum wage paid well above the current US$60,000 minimum.


Border gasoline prices won’t be brought into alignment. Mexico’s Finance Ministry, Pemex, and the national organization of gasoline vendors agreed to provide support to border retailers who cannot finance gasoline special taxes (Spanish). Their petition to equate prices along the border was denied, and drivers will keep crossing to fill up (English).


US ethane exports are on the rise. The US Energy International Agency expects a rise in US ethane production to 1.7 million barrels per day (b/d) in 2018 from 1.25 million b/d (English). The EIA forecasts a 180,000 b/d increase in ethane exports between the forth quarters of 2016 and 2018.


US diesel rode out on a rail. Pemex imported the first diesel shipment by train in a terminal managed by private companies (Spanish). The 60,000-barrel shipment travelled from Port Arthur, Texas, to San José Iturbide terminal, which normally uses pipelines and ports for imports. The shipment will supply Mexico City.


Trump’s wall will not slow down bitcoin. Bitcoin launched an instantaneous bank transfer from the United States to Mexico with a 2% cost (English). Money will be transferred within minutes without being affected by exchange rate fluctuations and transfer fees. Bridge21 CEO doubts these exchanges will be affected by Trump’s threats.



Infrastructure & Investment


Trudeau threatened Alberta’s oilsands. The locals were not amused. Prime Minister Justin Trudeau’s comments on “phasing out” oilsands angered Alberta’s citizens (English). Alberta’s oilsands are a target for environmentalists due to their greenhouse gas emissions, while providing thousands of jobs and supporting government services in Canada (English).


New York’s new goal is to have the biggest offshore wind project. New York proposed the development of a 2,400-MW offshore wind power by 2030 (English). The proposed project could power 1.25 million homes to become the leader in renewable energy production in the US.


MidAmerican Energy announced two wind farms in Iowa. The company announced the Beaver Creek project which will generate 170MW in Boone and Greene counties. In Mahaska County, MidAmerican will construct the Prairie wind project, with 84 turbines and a 168MW power capacity and the Wind XI project with a US$3.6bn investment (English).


Mexico’s solar energy will draw attention…and MXN200bn. The new rules for power transmission will attract MXN200bn in investments in the next five years (Spanish). The goal is to extend this type of generation to 155,000 consumers, the equivalent of 5% of Mexico’s homes, creating 24,000 new jobs and installing 6,000MW of capacity.



Old School Social


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


The Solar Summit: Mexico is January 27-28 at Intercontinental Presidente, Mexico City.


The 13th Annual State of the Energy Industry Forum is January 31 at the National Press Club

Ballroom, Washington D.C.


The Energy Mexico 2017 Expo & Congress is January 31-February 2 at Centro Banamex, Mexico City.


The Canwea Operations & Maintenance Summit is February 1-2 in Toronto, Ontario.


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



Lateral Thinking


SpaceX is back in action. After the accident last September, the California-based company launched a Falcon 9 rocket to place new satellites into orbit (English). SpaceX identified and corrected all possible causes of the accident and has 70 launches worth US$10bn waiting in line.



Quote of the Week


“The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.”


-Martin Luther King, Jr. (1929-1968), US civil rights activist and Nobel Peace Prize winner of 1964


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