Revisiting the Albertan oilsands

  Alberta boast the second largest oil reserves in the world in the form of oilsands, more than 173 billion barrels of oil... behind only Saudi Arabia.  Canada is also the single largest foreign supplier of oil to the United States, accounting for 17 per cent of total U.S. oil imports. The oilsands produce about 1.3 million barrels of oil daily, and there are plans to double production in the near future.  The 2 largest cities in this oil rich province are Calgary and Edmonton.  After numerous oil sands projects were shelved or postponed in 2009, things seems to be pickup up very well heading into the new decade...

Well for one, there is PetroChina's C$1.9 billion purchase of a 60% stake in a pair of oilsands projects at Dover and MacKay river.  This is the largest direct investment in an oilsands project by China to date. PetroChina will be required to spend more than C$250 million in each of the next 3 years, maintain an Alberta head office for its operating subsidiaries for at least 5 years, and ensure that Canadians occupy a majority of the senior management positions.

Secondly, Imperial Oil (a subsidiary of ExxonMobil Canada) recently gave the green light to revive its C$8 billion Kearl oilsands mine. The Kearl project will produce 100,000 barrels per day starting in 2012 and will eventually produce 300,000 barrels per day over 50 years when subsequent expansion phases are fully built.  Kearl's total recoverable oilsands is estimated at 4.6 billion barrels.  Kearl is situated in Alberta's Athabasca Oil Sands region.

In January 2010, Citigroup predicts oil prices to head towards US$90 per barrel in the coming months and to hover around US$80 in the long-term for 2010.  The Energy Information Administration (EIA) forecasts crude oil to average US$80 per barrel in 2010 and US$84  per barrel in 2011, higher than the average US$62 per barrel in 2009.  These are price levels that is well above what is needed to sustain the oil sands industry in the long-term.  Indeed, economic recovery has fueled oilsands optimism going forward!

Comments

[Michael]

Do we think China will start to become a big time international oil investor? I see cultural limitations, perhaps. Would anyone care to discuss?

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