The explosion on the Deepwater Horizon oil rig again in April of 2010 spurred an unprecedented global curiosity in exploring more accessible sources of oil. On the quick listing were the Canadian oil sands.
With an estimated three.Eight trillion barrels of stable or semi-solid forms of petroleum, there may be little doubt that the area is rich with oil. But only a fraction of that (less than 5%) is accessible with current technologies. Nonetheless, it’s estimated that over eight% may change into accessible with technological enhancements. Which will not sound like much, however 8% of the oil sands would produce 315 billion barrels, which would seemingly be the most important resource base on the planet, emphatically surpassing Saudi Arabia estimated to 275 billion barrels.
The implications for Canada are huge. Canada was the 6th largest oil producer in 2008 and will turn into in the top four or 5 in the next 20 years. There are a number of key catalysts that counsel vital growth in the sector.
Catalyst #1: New Venture Approval
The global recession shelved quite a few tasks across all sectors, but projects that have been previously being placed on hold are actually getting authorised. As this trend continues, confidence within the viability of the oil sands will develop. Large firms corresponding to Suncor Power and Canadian Natural Assets are anticipated to announce important new initiatives, and as this begins to happen confidence in the viability of the oil sands will develop, making funding opportunities look very attractive to investors.
Catalyst #2: Technological Developments
Technological developments beneath improvement will permit for oil to be extracted from the oil sands with develop into more environment friendly and cost-effective. Cenovus Power, for instance, is growing a process that is predicted to improve production rate by 30% and lower nonfuel operating value by 5% to 10%. One other firm, Petrobank Energy & Sources Ltd. has plans to begin implementing a patented expertise that has the potential to open up new areas for extraction, and improve extraction to 70% or eighty% up from the present 20% to 50%.
Catalyst #three: Elevated Merger and Acquisition Exercise
Unlike some other jurisdictions which can be closing the doorways to international investment or becoming too costly, the Canadian government has been welcoming of foreign investments. This, coupled with the high risks associated with different jurisdictions such as the Gulf of Mexico, activity in the quantity mergers and acquisitions is predicted to proceed. Already, companies in China have invested closely with joint ventures, such because the Athabasca PetroChina joint venture, and acquisitions such because the Sinopec acquisition of ConocoPhillips’ curiosity in Syncrude. Furthermore, CNPC, the Chinese state oil company, has expressed interest in creating an alliance with Alberta to help China meet their power needs. And China isn’t the one country making these strikes. An organization in France, Complete SA, made a $1.5-billion acquisition of UTS Power.
With these three catalysts in place a variety of investment opportunities exist. Share costs, which are at the moment trading at a discount compared to their ex-future oil sands initiatives valuations, could rise significantly as the potential within the oil sands becomes realized. Currently the market is remains typically hesitant to pay for the future oil sands and that is making a doubtlessly lucrative opportunity for investors.
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