Obama has a secret love affair that the tabloids know nothing about.
Although to be fair to our commander-in-chief, we’ve known about this burgeoning relationship for years.
Let’s face it: The United States’ oil addiction and Canadian crude are a match made in heaven.
And the U.S. isn’t the only one looking to Canada for the fossil fuel…
We know that China has been pining for the Canadian oil sands ever since prices collapsed in 2008.
Who can blame them? Two of their largest oil companies have shelled out more than $8 billion on oil sands projects, and that’s just within the last two years.
So why are oil sands investors gearing up for a new round of profits?
Simply put, the U.S. really is running out of options — especially in light of Obama’s latest oil strategy.
U.S. Oil Imports: Cutting the Slack
By now, you’ve probably heard about Obama’s energy plan. To recap, it involves reducing oil imports by 33% by 2025.
Okay, so we’ve heard that line (or one akin to it) since Nixon was dusting the Oval Office. In fact every single president since has had some plan or another for casting off the shackles of our foreign oil dependence…
This time, let’s give our president the benefit of the doubt and break things down.
According to the Energy Information Administration, we’re importing a hair under 12 million barrels of oil every day. So all we need to do is shave about four million barrels per day within the next fourteen years.
But that’s easier said than done — much easier. That’s probably why we’ve heard it proposed over and over again.
What’s worse is that our domestic oil production will never make up the difference. To think otherwise is too much wishful thinking for even the most optimistic of oilmen.
Let the Republicans continue their crusade to open up ANWR for drilling. The sobering fact is that if ANWR drilling was magically allowed tomorrow, it would take years before we saw a drop of production.
And do you really think the environmentalists won’t give up without a vicious fight?
Use less oil?
Let’s just say the EIA isn’t expecting oil to be dethroned any time soon.
But if we try reading between the lines of Obama’s ambitious goal, it might seem as if the president isn’t as worried about oil imports as he is with where that oil is coming from… namely OPEC.
During his speech at Georgetown University, Obama hinted at his growing love for Canadian crude after mentioning a tidbit about looking to neighbors with “steady and reliable oil resources.”
I’ll confess I giggled a little when he included Mexico to that mix. Our unfortunate southern neighbors have been struggling with the death of the Cantarell field for years, with no hope in sight for returning to their former production glory…
3 Million Barrels a Day… and Heading Higher
Is it any wonder that Canada has become our country’s largest source of foreign oil?
Canadian imports reached a new record of 2.8 million bbls per day during January. And believe me, Obama is practically gushing over the idea of replacing our thirst for OPEC oil.
But there’s a bit of a catch when it comes to Canadian oil production…
Conventional oil production in Canada peaked years ago. As a result, Canada has come to rely more on its single largest source of exports: the Canadian oil sands.
Two Ways to Bank Canadian Oil Profits
It’s nearly impossible not to be long on Canadian energy. In fact one of the first investments that caught my eye was a tiny company developing a new in-situ technology.
It was the first taste of oil sands profits for my readers and I, and we wanted more.
Right now, there are two great ways to play the oil sands.
The first is through infrastructure.
If we’re really expecting Canada to ease the pressure off of our OPEC oil addiction, we’re going to need pipelines. As you can see, pipeline stocks have performed tremendously for patient investors:
While many of the above pipeline stocks are taking advantage of the burgeoning oil and gas production from U.S. shale formations, both Enbridge and TransCanada will add new pipelines to the mix, allowing more oil sands production to flow into the United States.
A second way to invest in the Canadian oil sands seems obvious enough… Just follow the production.
But this gets a little tricky. Most people can only picture those environmentally nightmarish surface mining operations.
The future, however, is in the production that’s too deep to be shoveled into a truck. It’s the reason my readers have jumped ahead of the game with their latest Canadian play.
This time, it’s a company that’s perfecting its in-situ technology — and threatening to break wide open for investors in 2011.
Until next time,
Editor, Energy and Capital