by Tony Daltorio, Investment U Research
The first barrel of oil processed from the heavy, tar-like sands of northern Alberta, Canada, shipped in 1967.
Since then, exploration projects have identified enough of the stuff – also known as bitumen – that only Saudi Arabia is able to top Canada's 178 billion barrels of proven oil reserves. Among the companies to profit from the discoveries so far…
- Exxon Mobil (NYSE: XOM), through its Canadian subsidiary, Imperial Oil (NYSE: IMO). The division has published its plans to begin phase 1 of its C$8 billion Kearl mine project in 2012, which should start bringing in 110,000 barrels a day.
- PetroChina (NYSE: PTR): It agreed to pay C$1.9 billion ($1.76 billion) for a majority of the stake in both the Mackay River and Dover projects, run by Athabasca Oil Sands.
No wonder, when the first phase of the Mackay River project comes online in 2014, there will be a daily output of 35,000 barrels. Production could eventually reach 300,000 to 500,000 barrels a day at a total capital cost of as much as C$20 billion ($18.5 billion).
Even the Obama administration approved a C$3.7 billion ($3.4 billion) pipeline – the Alberta Clipper – that aims to carry 800,000 barrels of oil per day from Alberta's oil sands to a refinery in northern Wisconsin.
So why the renewed interest in oil sands?
The Oil Sand Irony: How an Energy Price Drop Has Boosted This Resource
Part of it comes down to lowered production costs, resulting from a drop in energy prices, of all things.
You see, in order to melt and extract deep deposits of bitumen, work crews have to utilize vast quantities of natural gas.
