Last Thursday the Alberta Government released a plan for development of the Canadian Oil Sands that calls for reducing the environmental footprint of the Oil Sands mining operations and increasing the quality of life in the Fort McMurray region. An article quotes the Alberta Treasury Board President as saying: “When it comes to Alberta’s oil sands, we believe that Canada can be a leader in finding innovative ways to ensure both economic growth and greater environmental protection”. The report is stated to be: “a long-awaited response to calls from all quarters to slow the pace of development and reduce the environmental effects of the oil sands projects”. Simon Dyer, director of the Pembina Institute’s oil sands program, is quoted as saying: “(The plan) doesn’t address the No. 1 concern Albertans identified when they were consulted two years ago, which was the pace and scale of development. And it lacks substance, so I don’t think it will stand up to the increased scrutiny we’re getting”.

The Oil Sands are the second largest petroleum reserves in the world with deposits containing an estimated 1.7 trillion barrels of bitumen, although only about 10% can be recovered through current mining processes.

My Comment: In the face of the current world economic malaise there recently has been very little talk of ‘Peak Oil’ and concerns over oil supply going forward. Economies recover, and the world economy will recover from what it is experiencing at some future (albeit uncertain) date. When that happens I think oil will again be ‘top of mind’, and I think it highly likely the Canadian Oil Sands will play a larger and larger part in world oil supply as new extraction technologies prove to be commercial. One example of such current technology development is that being undertaken by Petrobank (PBG:TSX). Watch for further M&A activity in the Oil Sands – the French company Total (TOTF:PA) currently is bidding for UTS (UTS:TSX) – and in particular watch for the possibility of China being interested in investing substantively in the Oil Sands going forward. Indeed there are legacy environmental and infrastructure problems, and these will have to be dealt with. History says (and here is a place I do buy into an application of history in today’s economic climate) that innovation leads to new manufacturing (read in this case ‘extraction’) techniques. I will be surprised if that does not happen in a commercial and environmentally friendly way in the case of the Oil Sands.

Read the referenced article by clicking here.

Disclosure: I am not currently a shareholder in Petrobank, Total, or UTS. My mention of these companies in this post are in each case neutral and should not be construed by readers as investment recommendations. Petrobank and UTS pay to advertise on StockResearchPortal.com.

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