The Weekly Brief: North American Integration

January 30, 2017 edition— Lake Erie Connector Project okayed; Wyoming and Mexico bet on wind; and the Wall threatens Mexico-US relations.






Last Week in a Minute or Less


Renewables & Electricity. A Wyoming wind project was approved and Mexico’s wind energy will skyrocket by 2030.


Natural Gas & Liquid Fuels. Winter came and made natural gas prices jump; the NEB approved the Lake Erie Connector Project; and Trump okayed the Keystone and Dakota Pipelines.


Oil & Gas Upstream. CAPP worried over Trump’s America first policy and tighter global crude oil balances by 2018.


Money & Power. The Wall killed the meeting between Trump and Peña Nieto; NAFTA will be renegotiated; and oil prices are trapped between OPEC cuts and US stocks.


Déjà vu all over again. Last week’s readers were particularly interested in Mexico’s solar industry (Spanish) and Mexico’s drivers crossing to California for cheaper gasoline (English).



Keeping Track of Trump


Trump trampled Obama’s Climate Action Plan… The Trump administration assured that President Trump has decided to eliminate “harmful and unnecessary policies” such as the Climate Action Plan (English). The goal is to end restrictions to increase wages by US$30bn over seven years, and leverage US$50 trillion from untapped shale oil and gas reserves.


…and Trump’s energy plan is contradictory. President Trump’s plan aims to revive the coal industry and also boost natural gas production, while experts note that low natural gas prices are the reason for coal’s decline (English). An increase in natural gas production will lower prices, strangling coal demand.


The Wall threatens Mexico-US relations. After Trump’s announcement of the Wall and Mexico’s refusal to pay for it, Peña Nieto canceled their meeting and Trump threatened to finance the Wall with a 20% border tax on Mexican products (English) (Spanish). In their meeting, Trump and Peña Nieto were going to discuss trade, migration, and security (Spanish) (English).


Trump administration set a gag order on EPA’s studies and data. The Environmental Protection Agency (EPA) will have to send any studies or data to political appointees for review before releasing it (English). The review extends to the EPA’s website and exceeds the customary practices of former administrations.



Macro Trends


Oil prices on hedge over OPEC cuts and US stock. Oil prices fell 1% on Jan. 25 due to an increase in US crude inventories and the expected OPEC production cuts in its meeting (English) (English). US crude price for March was set at US$52.75 per barrel.


The Wilson Center thinks a united North America would be stronger. The Wilson Center published an analysis on North American foreign policy recommending cooperation on international energy issues. The document assures that a long-lasting strategic view of energy security could aid the economic stability of the three countries (English).


Tighter global crude oil balances by 2018. The Environmental Information Administration (EIA) assures that global production and consumption are expected to increase by 2018, but consumption is projected to surpass production (English). Crude oil grew by 2 million barrels per day in the forth quarter of 2016 before the OPEC’s cut.


Cold weather and the dollar make natural gas prices jump. The price of imported natural gas rose 57% in January, 57.44 pesos per gigajoule (Gj), compared to 36.7 pesos per Gj in the same month in 2016 (Spanish). The price increased due to low temperatures worldwide and the cut in production.



Cross-Border Flows


NEB okayed the Lake Erie Connector Project connecting Ontario with Pennsylvania. The National Energy Board (NEB) approved the power line between Ontario and Pennsylvania (English). The NEB included 42 conditions including environmental protection and safety, but assured that the project will not have “significant adverse environmental effects”.


NAFTA is on the table… and could be doomed. President Donald Trump talked with Mexico’s and Canada’s leaders to plan a renegotiation of the NAFTA trade agreement (English) (Spanish). Trump will look for a better deal and so will Mexico, and if neither party obtains “clear benefits”,  both countries threaten to leave (Spanish) (English).


CAPP worried about Trump’s America first policy. The head of the Canadian Association of Petroleum Producers (CAPP) considered Trump’s “America first” remarks not detailed but worrisome. Canada’s oil industry is integrated with the US system, having 3.2 million barrels per day crossing the border into the US, 42% of total oil imports (English).


Sonora’s lithium could be used in US electric cars. Sonora will develop lithium mines and supply this material to producers of batteries for electric cars such as Tesla and Lucid Motors (Spanish). Goldman Sachs says global lithium production today amounts to less than 30,000 tons annually, while production is expected to reach 300,000 tons by 2025.



Infrastructure & Investment


TransCanada got the okay on its shale gas pipeline projects. The US Federal Energy Regulatory Commission approved the construction of TransCanada’s Leach Xpress and Rayne Xpress projects (English). The goal is to transport natural gas from the Marcellus and Utica regions to the Midwest and Gulf Coast.


A Wyoming wind project was approved. The US Bureau of Land Management and the US Fish and Wildlife Service approved permits for the United States’ biggest onshore wind development.  Completed, the wind farm will have 1,000 turbines, generating 3,000 megawatts or electricity for 1 million homes in Southern California through a new transmission line (English).


Trump gave the green light for the Keystone and Dakota Pipelines. President Donald Trump decided to support the construction of the Keystone XL and Dakota Access oil pipelines, while encouraging the use of US made products (English). Canada welcomed the news, but its focus is on pipelines directed to the Asian markets (English).


Mexico’s wind energy will fly 350% higher in 2030. The changes in the electricity market and the tenders will allow wind energy to increase 350% by 2030 (Spanish). According to the Energy Ministry (Sener), 6,633.1MW of wind energy will be added between 2016 and 2020 and an additional 5,366.9MW will come onstream from 2024 to 2027.



Old School Social


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


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.


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.



Lateral Thinking


Foremost, the Albertan village where drones are tested. Foremost is a 2,400 square-km area populated by 500 people and the only place in Canada to test drones at great heights (English). Drones can travel as high as 18,000 feet in the area, testing how they communicate and function with great altitude and distances.



Quote of the Week


“Of all our dreams today there is none more important — or so hard to realize — than that of peace in the world. May we never lose our faith in it or our resolve to do everything that can be done to convert it one day into reality.”


– Lester Bowles “Mike” Pearson (1897-1972) Canadian scholar and diplomat who won the Nobel Peace Prize in 1957. These words are part of his acceptance speech.



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