The Gulf
of Mexico disaster has changed U.S. priorities, costs, and energy supply
sources for years to come. But the fact that the U.S. needs energy
isn’t changing anytime soon, and as mass sources of green energy are
still a while away, the most likely alternative might be the most surprising
one.
With US$15 billion invested annually in offshore drilling in the United
States, the disaster in the Gulf of Mexico means that this money is getting
ready to migrate elsewhere. And it is the Athabasca oil sands of Alberta,
Canada, that are number one on the list.
Given the amount of bad press the oil sands get, this could come as a
shocker. But technological advances and improvements in recovery methods, as
well as reduction of water usage and greenhouse gas emissions, have made oil
sands a viable and popular option for the future of U.S. energy.
The numbers, too, are looking in their favor. Out of the 1.34 trillion
barrels that is the world’s total proved oil reserves (2009), only
about 20% (270 billion barrels) of this number is actually available to
free-flowing capital investment – the vast majority is in the tight
grip of various national oil companies.
And a good chunk of these “free-market” barrels, about 178
billion, is sitting underneath the feet of Canadians, or as some call them,
the Crazy Canucks. For a country that runs on oil, the United States
couldn’t have been presented with a better lifesaver. Compared to
alternatives such as Chavez’s Venezuela or the oil fields of the Middle
East, reliable oil from politically stable and friendly Canada is by far the
easier pill to swallow.
As it is, roughly one in every six barrels of oil consumed by a U.S. citizen
today comes from the Canadian oil sands. The fact that infrastructure is
already in place for oil sands development and oil already flows through
pipelines between the two countries only sweetens the deal.
So, we wouldn’t be taking a huge step in assuming that any future
capital spending that will be diverted away from the Gulf of Mexico will find
it hard to bypass Canada. In addition, as global oil supply is affected by
the drilling restrictions, in the long term we’ll be seeing higher oil
prices. While this news might not make the drivers amongst us happy, it
couldn’t get better for Alberta and the energy companies operating in
the oil sands. With oil prices hovering over US$70 a barrel, the stream of
investment dollars into the oil sands is guaranteed.
Obama’s first-ever Oval Office address has confirmed our expectations
of no more growth in the American offshore drilling industry anytime soon.
But the Gulf accounted for a large chunk of U.S. oil production (25-30%) and
consumption (9% – the entire consumption of France), and that shortfall
must be met.
While renewable energy is where the future of U.S. energy lies, according to
Obama, it is still some time before green energy producers will be able to
meet the full demands of the nation. In the meantime, authorities have also
realized the importance of Canada for U.S. energy and are enticing companies
with new pipelines. Plans on expanding the Keystone Pipeline, linking up
Texas and Oklahoma to 500,000 Canadian barrels a day, have already been drawn
up and put into motion.
The turmoil in the U.S. energy market has created a number of opportunities,
both in the short and long term. For now, investment into the Canadian oil
sands is about to increase dramatically, and things are moving rapidly.
We’ve uncovered the lowest-cost producer with significant upside
production, and they’re the one on the list as a takeout target by Big
Oil.
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[Discover the oil sands company Marin thinks so highly of… and get
ready to profit when shares shoot up. But oil sands are not the only energy
investment to benefit from the Gulf Coast disaster – read more hereor sign up right now for a $39/yr. subscription with 3-month
money-back guarantee.]
Marin Katusa
Casey’s Energy Report
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