- The Washington Times - Wednesday, May 16, 2001

TORONTO — The Bush administrations push to boost energy supplies to battle a power crisis in California and halt spiraling gasoline prices has lit a fire under Canadian energy producers, who are drilling oil and gas wells and preparing to ship electricity south in record amounts.
Few realize that Canada is the United States largest foreign source of oil, ahead of high profile mainstays such as Saudi Arabia and Kuwait.
In addition to oil, it is already a source of electricity for electricity-starved California, with much to gain as California scrambles to find power.
Canada holds the worlds third-largest reserves of natural gas, which it is also gearing up to export to the United States in record amounts.
Canadas growing profile as a source of U.S. energy comes as the Bush administration prepares to announce a national energy strategy tomorrow.
The plan is expected to streamline regulations held responsible for a shortage of refineries, power plants, pipelines and other infrastructure that is responsible for supply bottlenecks.
But in Canada, as elsewhere, energy producers have already responded to rising energy prices by digging, drilling and uncapping older oil and gas wells that have now become profitable.
"Its an enormous opportunity," said Greg Stringham, vice-president of the Calgary-based Canadian Association of Petroleum Producers.
Canada runs "neck-in-neck" with Saudi Arabia in monthly oil sales to the United States, Mr. Stringham said.
When refined oil products are added to crude, Canada tops the desert kingdom as a supplier to the United States month after month, according to the U.S. Department of Energy.
Also, Canada is already Americas sole foreign source of both raw natural gas and electricity.
Canadas biggest oil reserves lie in the "oil sands" of Alberta, with its estimated 300 billion barrels of reserves. There, the oil comes from the ground as a grainy mixture of oil and sand — requiring a difficult but increasingly viable extraction process given improvements in technology and higher market prices.
Canadian drillers are tapping into another 7 billion barrels of oil in Saskatchewan, 1.2 billion barrels in British Columbia, 6.5 billion barrels in the northern territories and 5 billion barrels off Canadas East Coast, Mr. Stringham said.
Sales of Canadian natural gas have also jumped, he said, with 3 trillion cubic feet heading south this year compared with 1 trillion cubic feet a decade ago.
Mr. Stringham said he expects annual sales to hit 4 trillion cubic feet within the next couple of years.
Canada, which ranks as the worlds third-largest producer of natural gas and the 13th-largest producer of crude oil, supplies about 16 percent of U.S. energy needs, Mr. Stringham said.
In 1992, with low prices and sluggish economic growth in the U.S., Canadian natural gas producers sunk just 900 new wells.
Last year, with those factors reversed, a record 8,300 new wells were drilled.
Roger Soucy, president of the Petroleum Services Association of Canada, said the same is true for oil. Mr. Soucy said the industry expects a record 18,200 wells to be opened by the end of 2001.
But oil and natural gas are only part of the picture. Californias battle against rolling blackouts is being fought with electricity sent downstream from British Columbia.
Hydro Ontario, eyeing the other half of the United States, is seeking licenses to build new power plants.
Ontario Prime Minister Mike Harris recently said he would consider building new nuclear power plants. Because it means more jobs, investment and sales to the United States, it is "something I think we should look at."
Californias hunger for electricity prompted British Colombia zinc and lead producer Cominco to stop refining ore so it could sell electricity generated in-house to the south.
As a result, Canada gets buffeted by the same market forces as the United States — but in the opposite direction.


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