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Fracking changes continental energy picture at ‘Three Amigos’ summit

The Globe and Mail reports on the upcoming ‘Three Amigos’ continental summit with Prime Minister Stephen Harper, President Barack Obama, and President Enrique Peña Nieto on February 19 in Toluca (which is located just outside of Mexico City).

“Bilateral irritants will be discussed. Mexico wants Canada to stop demanding visas before its citizens can visit. Canada wants the U.S. to stop dithering on Keystone XL. The United States wants its neighbours to stop fretting about border delays and turn to big picture items like the Trans-Pacific Partnership. (And) there will be smallish deals done and promises made, especially on items like helping others in the hemisphere have access to education and advancing citizen security and regulatory reform.”

“But the really big elephant in the room is energy. The North American energy picture bears no resemblance to when NAFTA was concluded.”

“Fracking is transforming the United States from a major importer into a potential net exporter of oil and gas. After a decade of decline, Mr. Peña Nieto’s sweeping oil reforms in Mexico have opened the door to private investment and will transform a formerly moribund state-controlled sector. New offshore, deep-water production and shale gas plays (fracking) offer massive investment opportunities. Mexican production may soar. Meanwhile, the Harper government is looking to ramp up Canadian production with an eye on exports from both coasts (with the Northern Gateway and Energy East pipelines) as well as to the United States (with the Keystone XL pipeline).”

“Yet the continental energy picture is bedevilled by treaties and bans practices rooted in eras long gone. The U.S. still has a ban on crude oil exports (Canada excepted). Trans-border pipelines (the Keystone XL conundrum) require an entirely different regulatory process than internal ones. Electrical grids are outdated, vulnerable to cyber-terrorism and insufficiently interconnected to deal with new sources of energy flowing in new directions. Meanwhile, neighbouring nations, especially in the Caribbean and Central America, desperately need modernized and reliable access to energy.”

The article concludes that given the ongoing pressure from Obama’s key constituencies, including environmental groups, it’s unlikely that a ‘continental energy vision’ will emerge from the February 19th meeting. We’ll be keeping an eye on this summit and offering analysis and commentary.

Further reading
Feb. 19th continental summit confirmed for Toluca, Mexico
Leaders seek to ‘revitalize’ NAFTA at Feb. 19 summit
Will the FTAA be relaunched in February?
Controversial energy law passes in Mexico