Alberta’s Oil Sands: 2 Guys and a Dump Truck!

: Alberta is the Saudi Arabia of Oil Sands

One of the best things that could happen to oil sands producers happened this past week. No, I am not talking about Tropical Storm Fay changing direction and heading away from the Gulf of Mexico, nor am I talking about the capture of a terrorist or even a pipeline going back online. What I am talking about is much bigger! Two guys worth about $80 billion dollars taking a stroll around Alberta’s oil sands this week while discussing Canada’s energy plans.

For those of you that don’t know, Canada is the Saudi Arabia of oil sands and the two guys I speak of are Bill Gates and Warren Buffet. Mr. Buffet was there to talk about the general overview of the oil sands and Canada’s place in world energy. Obviously, just the of a Berkshire investment in the oil sands business will send shock waves throughout the oil industry. While all the majors are running around Canada sticking pipes into holes, none carry the weight of a well thought, well placed investment by the Oracle of Omaha when it comes to money chasing an industry.

What are “Oil Sands?”

The oil sands look like a very rich, pliable kind of topsoil. So why then doesn’t oil come out when squeezed? Because it’s not warm enough. If you add this to hot water you’ll start the separation process and you’ll see the oil come to the top of the water and you’ll see sand drop to the bottom.

Industry officials estimate the region could yield as much as 175 billion barrels of oil, making Canada second only to Saudi Arabia in crude oil reserves. The total estimates could be two trillion or even higher,” says Clive Mather, Shell’s Canada chief. “This is a very, very big resource.”

Very big?

That’s eight times the amount of reserves in Saudi Arabia. The oil sands are buried under forests in Alberta that are the size of Florida. The oil here doesn’t come gushing out of the sand the way it does in the Middle East. The oil is in the sand. It has to be dug up and processed.

Last time I heard, $70 dollars a barrel made the process profitable enough to produce, so we have done our jobs with our gas-thirsty SUV’s, now cut the check, get the dump truck, and let’s get at it!