Alberta Oil Sands Proving Rich for Developers

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In a story published in early March, AXcess News covered the Canadian oil sands being developed in Alberta where government figures put the reserves second only to Saudi Arabia.

In a story published in early March, AXcess News covered the Canadian oil sands being developed in Alberta where government figures put the reserves second only to Saudi Arabia. Today, after the U.S. Department of Energy reported that crude oil stocks rose 2.1 million barrels, traders concern over world supplies pushed crude oil up over $1 per barrel, or 3 percent.

Peoria, Illinois-based Caterpillar, Inc. (NYSE: CAT) and other heavy-equipment manufacturers could stand to gain as much as $5 billion in sales as a boom in oil squeezed from Canadian sand may boost demand for mining trucks and parts.

Syncrude Canada Ltd., Suncor Energy Inc. (NYSE: SU), Shell Canada (TSX: SHC), Petrobank Energy and Resources (TSX: PBG) and other Canadian oil-sands miners will need to add almost 300 Caterpillar mining trucks and graders by 2013 to unlock Alberta's reserves, according to Finning International Inc., the world's leading Caterpillar dealer.

In early March, Petrobank announced that it increased its oil sands land base by 33% and initial start up operations was underway at the Whitesands pilot project.

Whitesands Insitu Ltd., owned 84% by Petrobank, acquired a total of 15 sections of oil sands leases at a net cost of $20 million.

"Suncor is now producing 260,000 barrels of oil per day from oil sands and expects the output to grow to 3 million barrels by 2015 and 5 million barrels per day by 2030," said Richard George, Suncor's chief executive at the National Petrochemical and Refiners Association annual meeting in Salt Lake City, Utah.

George pointed out that oil production from the Alaska North Slope and California is declining, leaving California refiners to look for imports from Latin America. "The Gulf Coast holds obvious attractions," he said. "It's the largest refining complex in the world. And with about half of the United States' coking and hydrocracking capacity, it already has the right pots and pans to run a wide variety of oil sands product slates."

Royal Dutch Shell Plc said its Shell EP Americas unit paid C$465 million ($400 million) to buy 10 properties in northern Alberta, the highest price paid for Canadian oil sand leases last month.

The Hague-based Royal Dutch Shell said its U.S. unit has formed a new company, SURE Northern Energy Ltd., to assess and exploit its new holdings, even though its 78-percent-owned Canadian unit, Shell Canada Ltd, is already a top investor in the oil-rich region of northern Alberta.

Amongst the junior oil sands development companies, Patch International, Inc. (OTCBB: PTCH), which was featured in the early March story, "Canada's Answer to OPEC", has been organizing to expand as well through a 2.5 to 1 reverse stock split, the formation of Patch Oilsands Limited Partnership and the acquisition of an oil sands property in the heart of the McMurray Channel in the Athabasca oil sands.

Patch's president, David Stadnyk, hinted at additions to the company's management team in an open letter to shareholders following the reverse of its shares when he said, "A big part of taking PTCH to the next level will be to welcome the right people onto our team to accelerate our growth strategy. We expect to make progress in this regard in the very near future."

Patch had also changed its stock symbol from PTII to PTCH.

For a junior oil sands development company, Patch is probably one of the most aggressive players in the Alberta oil sands market, mostly due to its consortium approach to acquiring property and the cash on hand it possesses thanks to shares of a Nasdaq traded pharmaceutical company it has been slowly selling for capital purposes.

Patch's Stadnyk is staying tight-lipped for now, but with all of its recent organization activities, Patch is probably moving towards buying more oil sand properties. Both Shell, Suncor and Petrobank surround Patch International's oil sands claims, putting their land in premium rankings.



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Eric Stevenson