Rising oil prices, plus uncertainty over a seven-week strike in Venezuela and possible war in Iraq, have yet to give a solid boost to projects in Canada's oil sands -- the world's largest reserve.
A few oil firms decided to boost investment, while another backed off, citing uncertainty over the Kyoto Protocol.
Interest in Alberta's oil sands have helped pump tens of billions of dollars into the western province's economy and likely will play a major role in the future of Canada's oil industry.
Unlike conventional oil wells, tapping the oil sands requires extracting a heavy, gooey bitumen stuck to every grain of sand, which can be refined into gasoline or other products.
So far, three oil-sands operations have gotten off the ground, including Shell Canada's Athabasca venture which started in December.
"Conventional crude oil is in decline. If you're in the oil business in western Canada, the best finds are in heavy oil," said Judith Dwarkin, an analyst with Ross Smith Energy Group.
With high world oil prices around US$32 a barrel, oil companies are seeing strong cash flows and want to invest, she added.
The Suncor and Syncrude consortium recently confirmed an almost C$3 billion (US$2 billion) investment in the oil sands this year, while other new players are coming on board for the first time since the Kyoto debate heated up last year.
French oil company TotalFinaElf last week joined in development of Alberta's oil sands, estimated to contain between 1.7 trillion and 2.5 trillion barrels of crude oil. It could invest up to C$435 million (US$283 million) as a partner in a four-phase C$1 billion (US$650 million) Surmont project.
"We have taken a stake, knowing it still has to be confirmed whether technologically and economically the oil sands will meet our rigorous investment criteria," said Jean-Luc Guiziou, president of Calgary-based TotalFinaElf Exploration and Production Canada Ltd.
Meanwhile, TrueNorth Energy, a Calgary subsidiary of US giant Koch Industries, announced Tuesday that it will defer a C$3.5 billion (US$2.3 billion) oil-sands development in Fort Hills, northern Alberta.
TrueNorth said it needed a business partner to share the investment and the risk but also cited the uncertainty over the impact of the Kyoto accord on reducing greenhouse gases.
Pierre Alvarez, president of the Canadian Association of Petroleum Producers believes the Kyoto accord will limit Canadian oil-sands firms, which have the highest production costs in the world.
"It's not the lack of resource that will hold us back, it's whether we can continue to attract the billions and billions of dollars required to get at those resources," Alvarez said.
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