Baltimore, MD--There are over a trillion barrels of oil estimated to be underneath the Canadian soil, which will be the solution to our racing demand for crude oil. And standing out of the crowd is one place.

You would be surprised if I told you how many people in the U.S. have absolutely no idea where we get our oil.

When I took an informal poll yesterday, not even one person was able to tell me which countries send us the most crude oil. Let's face it, the U.S. is an oil guzzling behemoth, consuming over a quarter of global production.

Nearly everyone thought it was Saudi Arabia. I know the Saudis are the most logical choice.

But as you can see below, they're not the right one:

Not a single person even put Canada on their list!

Out of the nearly two million barrels of crude our neighbor to the north ships us daily, over half comes directly from oil sands. I've mentioned before that this production could increase fivefold over the next decade.

And there's a few things we can expect to happen over the next few years.

For starters, we know that natural gas prices will keep rising. I'll give you one guess where we get practically all of our natural gas imports. So how can we be so sure the price is going to rise?

There are two major reasons.

The first is that Canadian natural gas production peaked years ago. So the amount of gas available to export to the U.S. will continue to decline.

Secondly, the increase in oil sands production means they're going to use a lot more natural gas to extract the oil. Remember, it takes roughly 1,200 cubic feet of gas to produce one barrel of oil.

I recall getting some questions as to why they're even messing with oil sands. I believe a few of you put it this way: "If it takes so much natural gas to extract the oil, why are they bothering with it in the first place?"

Although the process uses 1,200 cubic feet of gas, that one barrel of oil yields the same amount of energy as 6,000 cubic feet of gas.

Last time, I was concerned about the consequences of oil prices dropping significantly over the winter. However unlikely that may be, there's always a chance it could happen.

One of you made an excellent point to me yesterday. In fact, I'm kind of surprised I didn't mention it. Chalk it up to forgetfulness or however else you want to put it.

Basically, our friend felt that if the production coming on line over the next few years can keep pace with global demand, lower oil prices could be in our near future.

But it's what he said next that really made me smile, " . . . a possible lower oil price in the near term will set up truly outstanding investment opportunities."

He hit the nail right on the head.

At lower prices, many unconventional oil companies (producing oil sands, oil shale, etc.) are going to become sorely undervalued. That's when we can, as our friend puts it, "back up the truck to some real bargains."

On the Road

It's only about four in the morning here in Baltimore. I can't sleep. Yesterday I got into a conversation with my editor about the numerous oil plays in the Athabasca Basin. And there's one shining beacon that stands out--Fort McMurray.

I can't sit around any longer, or wait for the next available flight. In a few minutes I'm going to leave for Fort McMurray, and I refuse to come back until I find the next oil sands blockbuster.

So I'll leave you with a few (slightly modified, for the occasion) immortal words from Jake and Elwood Blues . . .

"It's 2,600 miles to Fort McMurray, we got a full tank of gas, half a pack of cigarettes, it's dark, and we're wearing sunglasses."

"Hit it."

Until next time,

Keith Kohl

"Energy stocks... The only way a human is going to make any money."

-- Matt Simmons, Peak Oil's first and most vocal proponent,
and founder of the country's last pure play energy investment banking firm.

Follow the money trail. Sign up for Energy and Capital now.

Enter Your E-mail Address Below:

By signing up, you'll also get our latest report, The Truth About Oil.

With all due respect, why would an intelligent, sentient, forward thinking being support the absolute destruction of the Athabasca River Basin, the pristine forests which are now being raped by oil sands "developers", and which in the future will be totally replaced by stagnant, poisonous, non-potable-FOREVER water, the misguided consummation of the balance of the regions natural gas supplies which left untouched by oil sand production would last an estimated 8 years, absolutely astounds me. Surely to Goddess you aren't considering this as an investment opportunity! Yes indeed,suckers are born every day, and every day they are devoured by children craving sugar fixes. PLEASE TELL ME YOU DON'T REALLY BELIEVE OIL SANDS TO BE AN ANSWER TO THE DESPERATE CRAVINGS OF A WORLD ADDICTED TO CONSUMERISM/CAPITALISM/THE AMERICAN WAY. It won't be long at all, in fact I will live to see the day, that the current generation of simians perish due to their insistence on future generations paying the price for their drug!

It comes as a great revelation to me that there are "numerous oil plays in the Athabasca Basin". You are a wee bit geographically challenged my friend. The Athabaska Basin is reknowned for numerous plays for a different type of energy: specifically nuclear energy derived from uranium. The richest uranium deposits in the world are located in the Athabasca Basin. Perhaps you are familiar with the names, McArthur River and Cigar Lake? All of these are located in northern Saskatchewan, the province that lies immediately to the east of Alberta and is slightly larger in area.

The oil sands and Fort McMurray to which your article refers, is located in Alberta. The Athabasca oil sands are so named because they outcrop or occur along the banks of the Athabasca River but in fact are more formally or technically known as the McMurray/Wabiskaw Oil Sands because the bitumen (or tar /low grade crude oil) is contained in the McMurray Formation and the overlying Wabiskaw member of the Clearwater Formation

There are actually three areas in Alberta that contain oil sands: Athabasca-Fort McMurray area is the largest, followed by Cold Lake and then Peace River. The Athabasca area, north of Fort McMurray is the only place where the oil sands are shallow enough to be surface mined.

Most of the oil sand resource in the other two areas, and including parts of the Athabasca oil sands, are too deep (>250 ft in depth) to be surfaced mined. In these areas the bitumen is recovered using in situ recovery methods such as SAGD or Steam Assisted Gravity Drainage. As the name implies, a tremendous amount of energy is utilized to recovery this bitumen or oil.

Incidently, these same formations extend eastward into western Saskatchewan where exploration and development are just getting started due to a government imposed moratorium. The resource may not be as large as that in Alberta, but preliminary studies suggest it is substantial.

I hope that this helps clarify a few things for you. I don't mean to be snarkey about this but you are talking about things that are happening in my own "backyard" so to speak and I have worked in the industry for over 30 years.

Sincerely,

Paul Ruck M.Sc(App Geo)P.Geo

Rubbish ! Sure long term but gas prices have been falling the last few months because all the storage facilities are full. Prices will still fluctuate according to inventiories as they always do with any commodity.

How can such a friendly neibour ignore a so vital fact.Wake up my dear friends.We do exist.Come and see by yourself.Do not believe what you ear on tv.See with your own eyes and realize how Canada is beneficial to U.S.A.