No one can say for certain, of course.

But whether prices continue to rise or not, there are plenty of opportunities out there for investors looking to capitalize on the world’s long-term needs for oil. Some believe the meteoric rise in oil we’ve seen over the last three years is a temporary phenomenon. T. Boone Pickens isn’t one of them.

The long-time oilman, and current chairman of BP Capital Management, was recently asked in a 60 Minutes interview when he thought we’d see $1.50 a gallon at the pump again. “We won’t ever see $1.50 a gallon again,” said Pickens. “No, that’s gone.”

It’s tough to disagree. On the demand side, citizens of the wealthy West aren’t using any less oil, nor are the up-and-coming Tigers of the East.

On the supply side, just look at many of the world’s biggest exporters: Iran, Nigeria, Venezuela, Saudi Arabia and Russia. It’s a virtual rogues’ gallery, filled with nations that represent tyranny, corruption or instability.

Fortunately, the world’s single-largest oil deposit sits right here in North America. Time magazine calls it “Canada’s biggest buried treasure.” It’s an area with up to 2.5 trillion barrels of oil, locked in Alberta sand. That’s eight times the total reserves of Saudi Arabia, enough to satisfy the world’s demand for petroleum for the next century.

This is easily the world’s most exciting energy story.

And one publicly traded company is supremely positioned to earn billions from this region in the months ahead.

The Competition For Oil Is Heating Up

In May, the International Energy Agency (IEA) revised upwards its estimate of world oil demand, squashing hopes that a significant decline in oil prices is imminent.

Demand growth this year is running at its fastest level in 24 years. Last year, world oil use was estimated at 82.6 million barrels a day. The United States burns a quarter of that. But competition for oil is heating up.

Emerging markets – and particularly giants like China and India – are rapidly industrializing. According to the U.S. Energy Information Agency, world demand for oil is expected to increase 54% over the next 25 years.

Unfortunately, American oil production has been on the downswing since 1970. And many of the world’s major oil suppliers are either indifferent or downright hostile to U.S. interests. Where can Americans look for a steady, reliable source of black gold?

How about 900 miles north of Montana, in Alberta, Canada?

Jed Clampett Never Imagined…

Alberta’s oil sands are the largest known reserve of oil on earth, containing between 1.7 and 2.5 trillion barrels. (Saudi Arabia, by comparison, has only 262 billion barrels of proven reserves. In fact, all OPEC nations combined have less than 900 billion barrels.)

For decades, these sands weren’t even considered part of the world’s oil reserves because the oil there wasn’t economically extractible at prevailing prices using then-current technology.

But times have changed… And the new gold rush is on.

In Alberta’s oil sands, energy companies don’t drill for oil. They dig it up. After excavation, giant trucks three stories high – carrying up to 400 tons of oil sands – carry it off to a processing plant.

There, the sands are heated in a cell where the oil comes to the top of the water and the sand drops to the bottom. This oil froth is then sent to an upgrader and eventually to a refiner. Is this oil really as good as the stuff coming from Saudi Arabia?

Actually, it’s better. According to Clive Matter, Chief of Shell Canada, this oil is “absolutely as good as it gets. In fact, it even trades at a premium because it’s high-quality crude oil.”

And here’s the kicker: Exploration of Alberta’s oil sands is virtually risk-free. You can’t drill a dry hole here. There’s no drilling at all. It’s a mining operation – and the reserves are thoroughly outlined. So what you really need is a company with plenty of machinery, money and manpower to dig it up and process it as quickly as possible.

That’s why you should own Suncor Energy (NYSE: SU).

The Blue Chip Oil Sands Play

There are dozens of small companies flocking to Alberta for a piece of the action. But in this capital-intensive business, why gamble on the small fry? We suggest you opt for the undisputed blue chip play: Suncor.

Based in Calgary, Suncor is an integrated energy company. It extracts and upgrades oil through its oil sands operations near Fort McMurray, Alberta. Its operations throughout Western Canada produce natural gas.

It operates a refining and marketing business in Ontario, with retail distribution under the Sunoco brand. And it has operations in the United States and retails its products under the Phillips 66 brand. It also manufactures the gasoline additive ethanol.

One hundred ninety-five dollars is the “live-out allowance” here in Fort McMurray. This place is ground zero for the Athabasca tar-sand boom. That money amounts to hardship pay, and the miners here need it.

Fort McMurray isn’t a big town. It has just three exits on the only highway within 100 miles. Forty years ago, there wasn’t much here at all. Now it’s one of the fastest-growing towns in Canada… and the extra $50,000 or so a year those miners earn puts a lot of juice into the local economy.

I spoke to a mortgage broker here yesterday afternoon. She told me they did a billion dollars in mortgages in Fort McMurray in 2007. You’d have to sell three beachfront condos a day for a year to make that kind of money in Florida. In Fort McMurray, they did it selling mobile homes.

A typical doublewide mobile home costs around $450,000 here. A modest two-bedroom with a garage, under 1,600 square feet, will set you back nearly $700,000.

That isn’t likely to decline anytime soon. Everyone is spending money up here, and the population will continue to increase. In 1963, one company mined the tar sands. Now, more than 60 companies are falling over one another for acreage. With oil over $100 a barrel, mining this trillion-barrel deposit is just too profitable, and too safe to ignore.

———- Advertisement ———-
Penny Stock set to drill Canada’s largest oil sands field

Canada’s single largest oil sands holding – over 707,700 acres – is now controlled by a tiny $4 stock

They’re conducting tests to determine how much oil is buried beneath their land… Preliminary estimates are 60 BILLION barrels of oil.

The results are due back in any day… that’s when I expect this tiny company’s share price to rocket to $20… $30… possibly even $50 a share.

To read more on the story, click here.
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I see three important factors that set the tar sands apart from nearly every other large petroleum deposit in the world… factors that continue to justify your investments in the area.

1. Canada’s oil sector is private. Last week, I talked about the increasing power of state-owned oil companies. In places like Saudi Arabia and Venezuela, huge government-run companies control all aspects of oil production. Canada’s government stays out of the oil-production business.

2. Canada operates under the rule of law. I love Canadian and Australian natural resource investments. These countries have long histories of being investor friendly. Russia and Venezuela have a tendency to screw companies and individual investors.

3. Canada has a short, safe, efficient transportation route to its largest consumer – the United States. Saudi Arabia can’t say this. Its oil production is threatened by instability… and the transportation route is half the world.

These three reasons will drive an explosion in Canadian oil sands. Production will climb from 1.1 million barrels per day in 2006 to 3.8 million barrels per day in 2020… That’s 250% growth in just 14 years.

Alberta has 857 projects on the books worth $169 billion. Those projects include everything: mines, electrical generation, parks, biodiesel plants, and roads.

However, the bulk of that money comes from oil-sand development. This is one of the greatest growth stories on the planet right now. And there are lots of ways to get in…

You can buy Suncor Energy and make decent gains, but it’s like the Microsoft of the oil sands. Everybody knows about it. I prefer sticking to smaller producers and infrastructure ideas.

I still like Husky Energy for a refining infrastructure play. It’s one of Canada’s largest and most powerful oil companies… and it counts the brilliant Li Ka-shing (China’s richest man) as a big investor. Its early investments in heavy oil refining have made it one of the largest refiners in the region. S&A Oil Report readers are up about 55% on the stock… and I see bigger gains ahead.

You can also buy natural gas for a play on Canadian oil sand development. Mining and processing the oil sand consumes huge amounts of natural gas. More and more of Canada’s natural gas exports to the U.S. will be diverted to the oil sands, which should support North American natural gas prices.

Whichever route you choose, I recommend you choose it soon. I believe a long era of high oil prices is ahead… and buying into Athabasca is the safe way to profit.

Good investing,

Matt Badiali

P.S. Most investors have no idea that the development of Athabasca is also a tremendous opportunity to collect some of the highest income payments in the world.

Source: Three Reasons You Need to Invest in Tar Sands Today

Today, we look at another sector the market is high on: Canadian tar sands. Our chart shows the past five years in Suncor Energy, one of the largest miners operating in Athabasca. When oil is trading for $60 a barrel, mining the tar sands is a good business. When oil is trading for $80, it’s a great business. And when oil is trading for $120, it’s a money machine.

As one of the institutional investors’ favorite ways to take a position in Canada’s tar sands, Suncor’s stock reflects all of the environmental, political, and economic concerns of Athabasca.

Suncor’s first-quarter cash flow increased 40% from one year ago. Shares have appreciated 480% in the past five years. The bull market in the world’s safest large deposit of crude oil is on!

Source: As Go the Oil Services, So Go the Tar Sands