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OTTAWA — The head of Mexico’s state-owned oil company envisions a NAFTA-style energy partnership with Canada and the United States.
Pemex chief executive officer Emilio Lozoya Austin isn’t the first person to muse about greater continental energy integration through such policies as resource pooling and harmonized regulations. But it’s a new energy world in 2014, two decades after the landmark North American free-trade agreement was struck.
The three countries are now fierce rivals in a North American energy landscape that has been dramatically reshaped by imminent U.S. energy self-sufficiency. Parochialism risks trumping integration, and common ground is increasingly hard to find.
There were troubling signs as Prime Minister Stephen Harper met his fellow NAFTA leaders in Mexico last week that the “three amigos” are drifting farther apart, and the schism is particularly apparent in energy.
In their post-summit statement, the leaders committed to a meeting of energy ministers later this year to vaguely discuss “opportunities to promote common strategies” in areas such as trade, infrastructure and unconventional energy.
But tensions run deep, going far beyond the Obama administration’s drawn-out non-decision on the proposed Keystone XL oil pipeline, which would deliver Canadian oil sands crude to the massive refining complex on the U.S. Gulf Coast. And it’s affecting almost every aspect of the cross-border energy relationship.
In the old peak-oil world, U.S. and Mexican production was in inexorable decline. Canada was the supplier of the future – a safe and vital exporter of oil, gas and electricity to the United States.
But the boom in shale oil and gas has turned the industry on its head. Shale gas is displacing both Canadian natural gas and U.S. coal used in the production of electricity. That’s putting a lid on gas prices, and forcing growing surpluses offshore.
It’s also making the United States the new energy superpower. The country recently jumped past Saudi Arabia and Russia as the world’s top oil-and-gas producer, according to the U.S. Energy Information Administration.
The United States is in a rush to build liquefied natural gas facilities to export its newfound bounty to energy-hungry Asia and elsewhere. Those plants are in direct conflict with proposed Canadian LNG projects, for both customers and investment dollars.
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