Home / World Business
Wed, Sep 14, 2005 - Page 12 News List

China and US maneuver for Canadian oil

OIL RUSH High-level US and Chinese officials are flocking to Alberta, where oil sands contain the biggest proven reserves outside of Saudi Arabia

AFP , CALGARY, CANADA

The oil rush has come to western Canada, with the US and China jockeying for position in what is potentially the world's biggest source of petroleum, known as the Alberta oil sands.

The potential of the oil sands has been known for decades, but with energy prices soaring and heightened fears of a global supply crunch, a growing number of producers from around the world are stepping up efforts to find ways to explore and extract oil.

The oil sands -- deposits of bitumen, a heavy black viscous oil that needs extensive treatment to be converted into an upgraded crude oil -- contain 175 billion barrels of "proven reserves," the largest in the world outside Saudi Arabia.

For an oil-hungry world, the Alberta sands represents the best opportunity for boosting supplies, some analysts say.

"Can you name me another country in the world that can increase its oil production right now?" asks Greg Stringham, vice president at the Canadian Association of Petroleum Producers.

High Costs

Extracting oil from the sands costs as much as US$12 per barrel, making it more costly than crude from other sources. But industry officials say a market price of more than US$25 a barrel will allow oil from the sands to be profitable.

Canada's total oil production is about 2.5 million barrels per day, of which 80 percent is exported to refineries in the US. Canada supplies about 16 percent of US exports, and 10 percent of all US petroleum.

As producers find new ways to extract and treat the bitumen, Canada could diversify its exports -- and China is among the countries in line.

China's interest in Canada's oil is seen as one of the reasons for the visit of President Hu Jintao (胡錦濤), who wants expanded trade with Canada.

Industry officials say Canada is likely to boost oil production to about 4 million barrels a day, thus providing an extra 1.5 million barrels to a global economy thirsty for more oil.

Chinese oil firms as well as others, including France's Total SA, are seeking partnerships with their Canadian counterparts as they bid for rights to sands -- found in an area of 140,800km2 of primarily northern Alberta.

Pacific pipeline

PetroChina is in talks with Canada's Enbridge meanwhile on the construction of a pipeline that would transport some 400,000 barrels per day from Fort McMurray, Alberta, to the Pacific coast, for an estimated cost of US$2.5 billion (US$2 billion).

Jiang Wenran (姜聞然), a political scientist at the University of Alberta, said China and Canada have mutual interests in cooperating in the oil sands exploitation. Both however are aware that China's ownership of a strategic asset is a politically sensitivity topic.

"All the major oil companies of China have offices in Calgary but they keep a very low profile," Jiang said. "They are aware of the Canadian debate about strategic and national security implications and they don't want to provoke anything so there are working in a discreet manner."

The US does not want to be left out of the action either. US Treasury Secretary John Snow recently visited the oil sands area, with Vice President Dick Cheney scheduled to follow.

"Now, the world is finally caught on to the fact that yes, these are actually developable," Alberta's Energy Minister Greg Melchin said. "It's a track everybody is interested in, including the United States."

This story has been viewed 4663 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top