US embassy cable - 03OTTAWA566

UNCLAS SECTION 01 OF 02 OTTAWA 000566 
 
SIPDIS 
 
STATE FOR P:  UNDER SECRETARY GROSSMAN AND MIKE HAMMER 
 
STATE ALSO FOR EB/TPP/BTA EB/ESC/ISC (MCMANUS AND 
ERVITI), WHA/CAN (MASON AND RUNNING), OES/EGC (MIOTKE 
AND DEROSA) 
 
WHITE HOUSE FOR NSC (SAMMIS AND BROCK), OPD (MCNALLY) AND 
OVP (O'DONOVAN) 
 
DOE FOR S-STAFF (HUDOME), INT'L AND POLICY (A/S BAILEY) AND 
IE-141 (PUMPHREY, DE VITO AND DEUTSCH) 
 
STATE PASS FERC FOR CHAIRMAN WOOD AND DONALD LEKANG 
 
COMMERCE FOR 4320/MAC/WH/ON/OIA/BENDER 
 
PARIS FOR USOECD/IEA 
 
E.O. 12958: N/A 
TAGS: ENRG, ECON, EPET, ETRD, CA 
SUBJECT:  ENERGY FROM CANADA:  PRELIMINARY 2002 DATA 
 
REF:  (A) CALGARY 066 
      (B) OTTAWA 503 
      (C) 02 OTTAWA 2474 
 
1.   SUMMARY/INTRODUCTION:  The dominant position of 
Canadian energy production and trade for the United States 
is reinforced by preliminary 2002 data.  The statistics from 
Canada's National Energy Board, Natural Resources Canada, 
and the U.S. Energy Information Administration show: 
. 
-- Canada exported an estimated 1.58 million barrels per 
day of crude oil to the United States during 2002 - a new 
record, up 4 percent over 2001.  (Canada is the United 
States' top petroleum supplier and largest foreign 
supplier of total energy). 
 
-- As Canadian production shifts toward frontier sources, 
the share of heavy/synthetic crude continues to grow and 
now accounts for 62 percent of Canada's crude exports. 
 
-- Canadian oil reserves continue to grow.  Proven 
conventional reserves grew by about 3.1 percent in 2001, 
faster than North American demand.  This does not include 
frontier reserves such as oilsands and offshore 
resources. 
 
-- Canada's oil sands contain 1.7 to 2.5 trillion barrels 
of oil.  Of this, at least 170 to 300 billion barrels are 
commercially recoverable with current technology at any 
world oil price over US$20 per barrel. 
 
-- Canada also supplies the vast majority of the United 
States' imports of natural gas.  Despite the U.S. 
economic slowdown, Canada's gas exports held level in 
2002, after growing by over 30 percent in the previous 
five years. 
 
END SUMMARY/INTRODUCTION 
 
2.   The United States and Canada have not only the world's 
largest economic relationship, but also its largest energy 
relationship.  Canada exported about US$30 billion worth of 
energy to the United States in 2002 - about 8 percent of 
Canada's exports to the U.S. (other major categories of 
which are vehicles and parts, machinery, and forest 
products). 
 
3.   About 96 percent of Canada's energy exports are 
destined for the United States.  U.S.-Canada energy trade 
has held steady through the recent U.S. slowdown, hanging on 
to rapid gains made in the 1990's (even though overall 
bilateral trade went through an unusual shrinkage of roughly 
ten percent in 2000-2002). 
 
4.   OIL:  Canada exports about 1.5 million barrels per day 
of crude oil to the United States, plus another 0.4 MMB/D in 
gasoline, heating oil, jet fuel and related products.  This 
provides about 17 percent of U.S. oil imports and nearly 10 
percent of total U.S. oil demand.  Canada's oil exports to 
the U.S. grew about 4 percent last year, and have increased 
29.6 percent over the past five years (2002 over 1997).  Oil 
sands production and exports are expected to reach one 
million barrels per day by the end of 2003. 
 
5.   NATURAL GAS:  Canada exported 106 billion cubic meters 
of gas to the U.S. last year - about 18 percent of U.S. gas 
demand.  These exports held steady from 2001, having risen 
more than 30 percent from 1996-2001.  Sustaining this growth 
requires joint efforts to facilitate the development of 
Arctic resources (see ref B for analysis). 
 
6.   ELECTRICITY:  Canada exported about 35 terawatt-hours 
of electric power to the United States in 2002.  This total 
was down from 2001, but net exports remain more than 20 TWH 
per year because U.S. power flows to Canada were also down 
(to about 14 TWH).  Canada's total electricity exports 
peaked in 2000 and are now on a declining trend, due to a 
lack of capital investment in both the U.S. and Canadian 
electric power industries and the difficulty of building new 
transmission capacity (see ref C for analysis). 
 
7.   URANIUM:  Canada has 15 percent of the world's known 
recoverable uranium, but accounts for over 30 percent of 
world production. 
 
8.   SOURCES:  For more information on Canada's energy 
production and exports, see websites of Canada's National 
Energy Board (neb-one.gc.ca), Natural Resources Canada 
(nrcan-rncan.gc.ca under "subsites - energy sector"), and 
the U.S. Energy Information Administration (eia.doe.gov 
under "country analysis briefs"). 
 
CELLUCCI