Alberta Oil Sands Equal Liquid Gold
By: Carmen Jackson | Posted: 02nd May 2006
The petroleum-drenched oil sands of Alberta (Canada) are the greatest oil deposits of North America, according to a recent international press report.
At a time, when world oil output is lagging behind the global demand for oil and security concerns hinder efforts to increase crude oil production, the Canadian oil sands offer a silver lining in the cloud and may attract major oil and gas exploration companies interested in making money by separating the oil sands from the earth.
Rising international crude oil prices are reported to have made the work on the oil sands viable. It reportedly costs $12—15 a barrel to produce crude oil out of the oil sands.
Since the current international prices for crude oil stand around $70 a barrel and there seems to be hardly any likelihood of the price falling below $40 – 50 a barrel in the foreseeable future, the oil giants may have no hesitation in investing their money into the numerous oil sands projects.
The proven recoverable oil reserves at the Alberta oil sands are estimated at as much as 178.8 billion barrels, compared to 261.5 billion barrels of Saudi Arabia, 125.8 billion barrels of Iran, 115 billion barrels of Iraq, 101.5 billion barrels of Kuwait, 97.8 billion barrels of United Arab Emirates, 77.2 billion barrels of Venezuela and 60 billion barrels of Russia. Thus, oil reserves of Alberta are estimated as second largest in the world and they come next only to Saudi Arabia.
The oil sands are contained in three major areas beneath 140,800 square kilometres of north-eastern Alberta - an area larger than the state of Florida, an area twice the size of New Brunswick, more than four and half times the size of Vancouver Island, and 26 times larger than Prince Edward Island. However, only about two per cent of the initial established resource has been produced to date.
How do the energy companies extract oil from the oil sands reserves? In the first instance, oil-soaked earth is mined, crushed and then mixed with water. This mixture is sent to a separating machine, where the oil called bitumen settles out. The bitumen is heated in a furnace. Then, the vapours are collected, cooled and condensed, resulting in the formation of oil. After some more processing, oil can be sent to a refinery.
However, much of Alberta's oil sands reserves lie too deep for strip mining. These deposits require the injection of steam deep under the ground to soak the bitumen. After several weeks of soaking, the oil-water mixture is pumped to the surface, where it is processed like bitumen collected through strip mining.
While the Alberta Oil Sands promise a potential oil source for future, environmental concerns threaten to become a constraint at some stage in future. However, the federal and the provincial governments are confident that environmental regulations would not block the operation and further expansion of the project, despite Canada's pledge to cut emissions under the Kyoto Protocol global warming agreement. The prize emanating from the project is so tempting – for the oil companies as well as for a government eager to earn tax revenue – that it may not be possible for any one to stop the project.
Another concern is about the supply of labour. Workers may be reluctant to move to the oil sands capital of the project due to prohibitive rent and lack of facilities. If the oil companies plan to produce three million barrels a day of crude oil within the next 10 years, they will have to hire 40,000 workers. At the moment, wages are reported to be increasing at an average rate of eight per cent a year for the 12,000 workers working on the oil sands project in northern Alberta. Even now the oil companies are reportedly hard-pressed to find welders, plumbers, project managers and other skilled workers.
There is no doubt that both the United States and Canada will benefit from the project. The US will be able to meet part of its requirement of imported oil from its next-door neighbour, while Canada will get a reliable customer at hand, willing to buy increasing quantities of oil from it for an indefinite period.
The US oil security will also be greatly boosted since the oil reserves are estimated to be the second largest in the world and oil production is, also, expected to go on increasing with the passage of time.
The addition of 178 million barrels to the proven recoverable world oil reserves, together with an increase of one to two million barrels in the daily oil production within the next few years will be a significant development and it should definitely have a favourable impact on the global oil market.
For the investment community the oil sands represent a very lucrative opportunity. Websites like www.findst.com offer insights into various Alberta Oil Sands Stocks . Conduct your research diligently and you should be able to find "liquid gold".
About the Author
Carmen is an Insider Trading Analyst for Findst, an Oil and Gas Portal focusing on oil and gas stocks and oil and gas jobs specifically oilfield jobs and oil rig jobs.
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Tags: united arab emirates, oil deposits, prince edward island, global demand, crude oil prices, vancouver island, square kilometres