Growing U.S. demand for Canadian natural gas has been a dominant factor underlying many of the pipeline expansion projects this decade. The U.S. and Canadian natural gas grids are highly interconnected and Canadian natural gas has become an increasingly important component of the total natural gas and LNG supply for the United States.

At the close of 2004, the U.S. natural gas transportation network included more than 200 mainline natural gas pipeline systems. Combined, these 107 interstate systems and more than 90 non-interstate systems account for over 297,000 miles of pipeline. Moreover, the interstate network represents approximately 148 Bcf/d of natural gas transportation capacity while the non-interstate pipelines account for at least 30 Bcf/d.

U.S. natural gas consumption and imports are expected to expand substantially in coming decades, with the fastest volumetric growth resulting from additional natural-gas-fired electric power plants. Increased U.S. natural gas demand and consumption will require significant investments in new pipelines and other natural gas infrastructure.

More than 80 percent of U.S. natural gas imports come from Canada, mainly from the western provinces of Alberta, British Columbia, and Saskatchewan. Overall, the United States depends on natural gas for about 22 percent of its total primary energy requirements (oil accounts for around 41 percent and coal for 23 percent).

Since August 1996, the Iran-Libya Sanctions Act (ILSA) has imposed mandatory and discretionary sanctions on non-U.S. companies that invest more than $20 million annually (lowered in August 1997 from $40 million) in the Iranian oil and natural gas sectors. On August 3, 2001, President Bush signed into law the ILSA Extension Act of 2001

In December 1975, the Energy Policy and Conservation Act (EPCA) was passed, officially establishing the Strategic Petroleum Reserve (SPR) as a reserve of up to 1 billion barrels. To store the reserve oil, the U.S. government acquired several salt caverns along the Gulf of Mexico coastline. The first crude oil was delivered to the SPR in 1977 and stored at the West Hackberry storage site near Lake Charles, LA.

Twenty-five major U.S. energy companies reported overall net income (excluding unusual items) of $26.0 billion on revenues of $295.1 billion during the third quarter of 2005. This level of net income represented a 69 percent increase relative to the third quarter of 2004

Production from deepwater areas of the Gulf of Mexico has been increasing rapidly, with deepwater wells now accounting for about two-thirds of total U.S. Gulf output.

Alaskan oil production is expected to decrease by 30,000 bbl/d in 2005 and by 20,000 bbl/d in 2006, to 860,000 bbl/d. This continues a steady decline since the state\'s peak output of 2.02 million bbl/d in 1988. For the period January-August 2005, Alaska averaged production of about 872,000 bbl/d of oil, or about 16 percent of total U.S. crude oil production

EIA expects that lower-48 States oil production in 2005 will decline by 340,000 bbl/d from 2004 levels, to 4.17 million bbl/d. For 2006, an increase of 400,000 bbl/d is expected. Much of the 2005 reduction and 2006 rebound is due to the disruption and subsequent recovery of production in the Gulf of Mexico.