TORONTO (AP) -- Canada's natural resources minister said Tuesday that a report indicating the U.S. will become the world's largest oil producer by the end of the decade should serve as a wakeup call that illustrates the pressing need for Canada to diversify its energy exports.

The International Energy Agency reported this week the U.S. will become the world's largest oil producer by around 2020 as new exploration technologies help find more resources. The energy watchdog also predicted that greater oil and natural gas production, as well as more efficient use of energy, will allow the U.S. to become largely energy self-sufficient by 2035.

Canada is America's No. 1 source of foreign oil. Canadian Natural Resources Minister Joe Oliver said 98% of Canada's oil exports and 100% of its gas exports go to the U.S. He said the U.S. will need less and less of it.

Oliver said it's critically important to build pipelines to the Pacific Coast so Canada can export to Asia.

"Here is a respected international organization in very clear and stark terms indicating the fundamental shift in the energy future of the world," Oliver said in a phone interview. "It will help reinforce our message. Unless people are willfully blind they are going to have to accept the reality of a fundamental change in the energy picture."

A proposed pipeline to the Pacific Coast that would allow Canadian oil to be shipped to Asia is undergoing an environmental review. Prime Minister Stephen Harper's government has been a staunch supporter of the 1,177-kilometer (731-mile) Northern Gateway pipeline but there is fierce environmental and aboriginal opposition in the Pacific Coast province of British Columbia and there is no guarantee it will be built.

The province of neighboring Alberta has the world's third-largest oil reserves after Saudi Arabia and Venezuela: more than 170 billion barrels. Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million in 2025, which the oil industry sees as a pressing reason to build pipelines to the west coast.

Oliver notes that limited pipeline capacity and the bottleneck of oil in Cushing, Okla., where benchmark West Texas Intermediate crude is delivered, has led to a price differential with Brent crude, used to price international varieties of oil. He said not selling Canadian oil on the international market is costing Canada over $40 million dollars a day.

Oliver said Canadians will increasingly understand that the importance of selling Canada's oil to Asia because it means an immense economic advantage to doing that in terms of jobs and revenue for social programs.

"There's a huge downside if we don't do it in terms of lost opportunity," he said. "We would be the only country in the world with huge resources (that we) are somehow not developing them and exporting them. I think our friends in Norway and Australia look at us with some bemusement as they enrich their countries with the export of their resources."

China's growing economy is hungry for Canadian oil. Chinese state-owned companies have invested billions in Canadian energy in recent years. And Chinese state-owned CNOOC (OTC:CEO) is proposing a $15.1 billion takeover bid for Canadian oil and gas producer Nexen (NYSE: NXY). It would be China's biggest overseas energy acquisition. Harper's government is reviewing whether the deal provides a net benefit to Canada.

The U.S. oil boom is being driven by a newfound ability to squeeze oil out of rock once thought too difficult and expensive to tap. Increased drilling is driving economic growth in states such as North Dakota, Oklahoma, Wyoming, Montana and Texas, all of which have unemployment rates far below the national average of 7.8%. North Dakota is at 3%; Oklahoma, 5.2%.

Canada has 7.4% unemployment. Western Canada's oil sands boom has fueled the country's economy, which has fared better than other industrially developed nations.

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