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Weekend: Unlocking Oil Sands Profits

Keith Kohl

Written By Keith Kohl

Posted March 12, 2011

Welcome to the Energy and Capital Weekend Edition — our insights from the week in investing and links to our most-read Energy and Capital and sister publication articles.

The time to be shocked over triple-digit oil prices has passed.

Maybe four years ago, we could’ve spared a moment or two.

But today is a much different climate — not only did we expect it this time around… we’ve been planning for it.

How could they not see it coming?

U.S. oil consumption is back on the rise.

Although we haven’t reached 2008 levels, we’re slowly making our way higher. And more than ever, we need foreign oil…

 US Oil demand 3-11

But this time around, I’m not talking about OPEC oil.

Begging for bitumen

I’ve shown my readers this data before. Recognizing this trend has lead to some tremendous investing opportunities.

It’s no mistake that we’re not looking to OPEC for more oil.

And even though OPEC supplies us with more than 4.5 million barrels of oil every day, there will be a day when that addiction is kicked.

Of course, in order to ‘kick’ that Mideast oil fix, we’ll have to find a suitable replacement.

Again, let the EIA data speak for itself…

According to them, we’re buying more Canadian oil than ever before. In December 2010, we imported 2.7 million barrels per day from our neighbors to the north.

If we’re going to continue to rely on Canadian crude, remember that their conventional production isn’t as rosy as you might expect…

That oil will primarily come from one source:

Canadian crude production

Oil sands investing 101

Right now, the Alberta oil sands are in the middle of undergoing a significant change.

If I were to ask you the first thing that comes to mind when I mention oil sands production, what would it be?

Is it one of the massive trucks used for hauling the resource, several tons at a time?

Maybe it’s the idea that of those surface mining operations can be seen from space…

But the future isn’t in the nightmares of environmentalists…

One of the most underrated facts about the play is that only 20% of the entire resource can be mined. The rest is too deep.

And believe me, they’ve spent decades running trucks back and forth along those mining roads.

When the Chinese spent billions buying their share of the Syncrude project, they made a fatal error: They didn’t take this change into account.

Of course, the technology to reach the rest of the oil sands’ resource base isn’t a secret.

These companies with experience in in-situ techniques will be crucial to increasing oil sands production.

Securing that future Canadian crude will be invaluable — especially when it comes from a non-OPEC source.

On Monday, I’ll tell you all about one in-situ play that’s leading the charge.

In the meantime, in case you missed some of our top investment stories this week from Energy and Capital or our sister publications, you can find them below…

Enjoy your weekend,

keith kohl

Keith Kohl
Editor, Energy and Capital


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