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Cablegate: Energy From Canada: Preliminary 2002 Data

This record is a partial extract of the original cable. The full text of the original cable is not available.

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

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