Oil Sands Update
Posted by adam.dada on May 19th, 2006
The Globe and Mail just released an article dealing with some tar sands/oil sands investments being performed by the Canadian company North American Oil Sands Corp. The article says that NAOSC will be investing CN$7.4 billion in the next 9 years to develop heavy-crude deposits and bring out as much as 160,000 barrels a day. This is about half of what Columbia exports just to the U.S., so it isn’t a huge production quantity, but any start such as this will put some pressure on Middle Eastern and South American crude oil.
Yesterday, Reuters published an article titled “Connacher CEO sees oil sands producing next year” dealing with another Canadian company, Connacher Oil and Gas Ltd, working on oil sands in hopes of bringing a paltry 10,000 barrels a day. Considering the small investment they’re making, though, 10,000 barrels is still a decent profit if the sands can be processed profitably. The article says that production might ramp up to 4 million barrels a day by 2020, which is a significant amount and would put huge downward pressure on the Middle East, especially considering Canada could be a large supplier to China. Shipping oil from Canada to China is also cheaper than bringing it from the Middle East.
Bloomberg News also covered the first article with more of the same. They say that the tar sands output could rise to 70,000 barrels a day by 2011, but only time will tell. With so many companies trying to get capital investments from international funds, I would take some of these numbers with a grain of salt until we see actual production methods being profitable. Canada has a lot less political volatility than the Middle East and South America, so hopes are high that they’ll have lower prices solely based on the lower security costs necessary to distribute the refined oil.
Discuss this article at the oil report forum.