Canada has world's largest oil reserves
The worlds largest oil reserve is not lying under Saudi Arabian deserts or under the sea, it is clinging to grains of
sand in the Canadian boreal forest of Northern Alberta. Between 1.7 tn and 2.5 tn barrels of crude oil, 300 bn of
which are expected to be recoverable, are spread like topsoil across thousands of sq km of Alberta forest and
And thanks to new technology being developed by many large oil groups, it may offer a seemingly limitless supply of North American petroleum products with the scoop of a steam shovel. "Alberta is in a very enviable position to supply its own needs and those of its trading partners over the next 50-100 years," Murray Smith, Albertas Minister of Energy said ahead of his speech to a conference on North American energy in Washington.
And for energy-thirsty Americans, the reserves may be key to President George W. Bush's desire to rely more on a continental energy plan, rather than its oil supplies from the turbulent Middle East. "Security of supply is always a key issue among members of [the US] Congress. We have to reduce our dependence on foreign oil, but that's very difficult to do," said Robert Ebel, director of Energy and National Security at the Centre for Strategic and International Studies (CSIS) in Washington. The centre is hosting the energy forum. "There are a lot of people in the US who need educating on the importance of Canada as an energy supplier to the US in oil and natural gas," he added.
Collective investment in the Alberta oil sands has become one of the worlds largest ongoing engineering projects with
more than $ 6.3 bn spent over the last three years to upgrade recovery operations and refining technologies. Another
$ 10 bn is in the works and a further $ 19 bn in development proposals from companies like Imperial Oil,
Petro-Canada, Suncor, Syncrude, Shell, Chevron and Conoco awaits regulatory scrutiny and approval.
"We've seen tremendous investment from US firms in the oil sands. It has clearly become an important piece of the North American energy puzzle," said provincial energy minister Smith. Biggest drawback is high production costs The development has turned the small city of Fort McMurray into Canada's hottest marketplace with housing costs that rival the country's biggest cities and skilled labour commanding premium wages.
But the biggest drawback for oil sands development is the high production cost associated with extracting the heavy,
gooey bitumen -- a petroleum product that can be refined into gasoline or other products -- stuck to every grain of
Production costs, although significantly cheaper than a decade ago, still range from $ 11 to $ 18 per barrel of oil sands bitumen. This is considerably more expensive than producing conventional Persian Gulf light crude which costs less than $ 2 a barrel to recover.
Companies use Steam Assisted Gravity Drainage, which works by drilling parallel pipe wells into oil sands that sit below rock caps. Steam is forced through one well that heats the oil sands and releases the bitumen from the sand to drip into the return well and be pumped to the surface.
If it all plays out as planned, oil sands production will more than triple from the current level of 600 000 bpd to
more than 2 mm bpd of oil by the next decade. Allan Ross, an energy analyst based in Calgary, says with 20 mm bpd
needed to satisfy the energy-thirsty United States, ample supply from a friendly trading partner will be important in
the coming years if oil prices remain high.
Currently, Canada supplies 1.8 mm bpd of oil to the United States. "Oil sands are too crucial for the Americans to ignore. President Bush has said they need reliable sources of energy. "Oil sands are rock solid. It'll be there day-in, day-out for many presidential terms," Ross said.