The Biggest Oil Opportunity in the World and How You Can
Profit from it
by Leon Altman
Published on this site: August 6th, 2005 - See
more articles from this month
Where is the second biggest deposit of oil reserves in the
world?
In the oil sands region of Alberta, Canada. Oil sands are
a thick, viscid mixture of bitumen, sand, clay, and water.
Alberta's oil sands is comprised of 3 regions with the Athabasca
area being the largest and the closest to the surface. Underneath
these gooey tar sands lie trillions of barrels of oil.
So then you may ask why have we been so dependent on Mideast
oil. Why haven't we just stayed nearby and relied on Canada?
In fact, Canada is the largest supplier of crude and refined
oil to the United States, having supplied 2.1 million barrels
per day in 2004. But the percentage supplied to the US and
other parts of the world is about to grow much larger.
The big difference between oil sands and oil from the desert
sands of the middle east is difficulty of extraction. The
oil sands process essentially entails extracting bitumen from
the sand, and upgrading it to light crude oils. Easier said
than done because this is thick stuff and has been expensive
to mineand extract. However new technologies are changing
the equation and making it much more cost-efficient to mine
and extract from the oil sands.
Mining operations are used to produce reserves close to the
surface. For oil that is deeper under ground, Steam-Assisted
Gravity Drainage (SAGD) and Cyclic Steam Stimulation (CSS)
are used. Other examples of new technology and extraction
methods include burning bitumen instead of gas to produce
steam, a solvent-assisted production technique called VAPEX
and a system that injects air into the oil well and ignites
it to stimulate oil flow.
In addition to improvements in technology, higher oil prices
are fueling expansion in the oil sands, and a lot of people
want in. The Chinese, for instance. In April, China National
Offshore Oil Corp., predominantly owned by the Chinese government,
bought nearly 17% of MEG Energy Corp. for $122 million. The
company is developing a northern Alberta project estimated
to pump 25,000 barrels of crude from the oil sands by 2008.
And Canadian oil pipeline giant Enbridge has announced a preliminary
deal with PetroChina to anchor a $2-billion oil pipeline to
the West Coast.
So how can you benefit from the increased exploration, production
and sales of crude oil from the oil Sands of Alberta? Choose
among the stocks of companies that are investing in the area
and applying new technology to extract oil more cost-efffectively.
Companies than can capitalize on the increasing role of Canada's
oil sands in the world's energy needs include Suncor (NYSE:
SU), Encana (NYSE:ECA), Canadian Natural Resources NYSE:CNQ)
Deer Creek Energy (DCE.TO), Total S.A. (NYSE:TOT), Petro Canada
NYSE: PCZ), and, with its acquisition of Terasen whose pipelines
are well-positioned to transport growing production from the
Alberta oil sands, Kinder Morgen (NYSE: KMI).
And while it may remain somewhat more expensive to extract
oil from Alberta than from the Mideast, consider the effects
of global politics, terrorism and turmoil, and the chilly
wilds of Northwest Canada become very attractive indeed.
Leon Altman creates and runs websites that uncover
opportunities for investors. To find more opportunities in
oil and gas as well as other sectors, subscribe to his free
Select Sectors letter at http://www.investingin.com/SL-
Oilandgas.htm and check out his websites: http://www.InvestingIN.com
and http://www.SmallcapRecap.com
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