The BP Deepwater Horizon oil spill has triggered outrage among the general public and may lead to heightened regulatory environment for the offshore drilling industry. Already the Obama administration has suspended shallow-water drilling in the Gulf of Mexico until producers resubmit plans to meet the revised safety and environmental rules. In the months and years to come, additional restrictions may be put in place to prevent future disasters and potentially increasing the cost of oil exploration. In this scenario, Canada’s oil sands for the US oil supply attain greater importance.
Renowned consultancy IHS CERA recently published a report titled “The Role of Canadian Oil Sands in U.S. Oil Supply”. Some of the key takeaways from this report are noted below:
“Geography has made us neighbors. History has made us friends. Economy has made us partners. Necessity has made us allies.”
—John F. Kennedy, Address Before the Canadian Parliament in Ottawa, May 17, 1961.
Last year, 60% of the US petroleum demand was satisfied by imports from over 40 countries. However, over the past decade 70 percent of crude oil imports have been sourced from just five countries as the table shows below: [ images]
It is interesting to see Canada among the top five suppliers to the U.S. Canada’s share of US oil imports jumped from 15% in 2000 to 21% in 2009, underscoring the strategic importance of Canadian oil sands.
Compared to other oil producing countries, Canada has the following advantages:
In addition to Canadian companies, American and other multinational companies have invested heavily in the Canadian oil sands industry. US investors have provided capital for the development of various oil sands projects, reaping handsome profits in the process. Some of the major Canadian firms that are involved in the development of Alberta oil sands are Suncor Energy (SU), Nexen Inc (NXY), Canadian Natural Resources (CNQ), Imperial Oil (IMO), Teck Resources (TCK), Husky Energy (OTCPK:HUSKF), Encana (ECA) and Talisman Energy (TLM).
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