North America--The Energy Picture

North America
The Energy Picture

prepared by

North American Energy Working Group

June 2002

(5) North America — Infrastructure: Oil

North America’s energy infrastructure and energy flows (oil, natural gas, coal, and electricity) are increasingly interconnected. Both the quantity of flows and the complexity of the infrastructure are growing. This section includes maps of fossil fuel reserves, current energy infrastructure and possible new energy interconnections in North America.

Cross border oil flows are very important to the region’s economies. Canada and Mexico are key suppliers of crude oil to the United States. Oil products flow back and forth among the countries — conveyed in trucks, pipelines, and by ship.
Canada ships major quantities of its natural gas output to the United States through several pipeline connections.
Natural gas flows between the United States and Mexico, with Mexico importing more gas from the United States than it exports to the United States. There are several pipeline connections.
Both Canada and the United States are net coal exporters, some of which is metallurgical coal. Mexico imports small quantities of coal from the United States.
Electricity connections across the borders of the three countries provide important regional supplies and help offset the need for expansion of national capacity.

Oil Infrastructure in North America

Though much of the oil infrastructure in North America is well developed, there are continual new structural requirements for exploration, development, production, refining, transport, and storage. These needs present important issues for investment, trade, and development.

North America’s oil industry operates within an array of different national, state, and provincial laws. Section 6 of this report provides detail about the legal and regulatory environment within North America. There are important differences among the various national jurisdictions. In Canada, although the federal government has jurisdiction over interprovincial and international trade, the legal authority over most resources and infrastructure resides with the provinces. In Mexico, Petróleos Mexicanos (Pemex) has control over infrastructure and resources for most of Mexico’s petroleum industry, including exploration, development, production, refining, and the basic petrochemical industry. In the United States, infrastructure and resources on federally-controlled public land (including offshore areas) are under the control of the federal government. Other resources and infrastructure development, production, and refining are mostly privately owned. Businesses engaged in interstate commerce are subject to federal laws and regulations.

North America has a generally modern and adequate oil infrastructure compared to many regions of the world. Nonetheless, there is an on-going requirement for development and upgrades. Technical and transport factors are particularly important to infrastructure development in the petroleum industry. At a technical level, the characteristics, such as gravity of the oils to be processed or transported, affect infrastructure requirements. Distances between production and refining require infrastructure for transport.

The physical characteristics of crude oils play an important role in cross-border cooperation and infrastructure development in North America. Some of North America’s key oil resources require heavy processing before being ready for market. For example, Canada’s huge resources of oil from oil sands require large commitments of infrastructure for their development, transport, and processing. Mexico’s heavy crude oils (Maya) also require significant development, transport, and refinery adaptations. North America has a huge market for lighter oils (gasoline, jet fuel, liquefied petroleum gases) that requires significant processing of heavy oils. There are some examples of cross-border cooperation that have helped address the regional needs.

Pemex (Mexico) is working on various deals with companies in the United States in which the U.S. company develops refinery coking capabilities and Pemex provides longer-term supplies of heavy Maya crude oil. Shell Oil (United States) at Deer Park, Texas, is an example of these deals.

Distant resources require infrastructure for transport. Canada’s crude oil in the west (Alberta) and sweet crude in Newfoundland are both distant from key markets in Ontario, Quebec, and the United States. Mexico’s production requires transport both inland and across the Caribbean. The United States transports oil great distances from Alaska.

Oil — Canada

Oil — Remaining Established Reserves, Year-end 2000
(Million Barrels)

Canadian Oil Pipelines and Refining Capacity

Canadian and U.S. oil pipeline networks are largely well integrated.

Oil — Mexico

National Pipeline System

Oil Refineries and Pipelines

Oil — United States

Location of Lower 48 States Oil and Gas Fields

U.S. crude oil reserves are located primarily in Texas, Alaska, California, Louisiana, Oklahoma, and Federal offshore.

U.S. oil infrastructure is most developed around these reserve and production centers.

There are extensive pipeline connections with Canada, and to a lesser extent, Mexico.

Proceed to (5) North America — Infrastructure: Natural Gas

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