Canada's Natural Resources booming

Canada's oil sands are the second largest known hydrocarbon reserve in the world, and are attracting immense investment because of Canada's economic and political stability and technological capability.The Canadian National Energy Board says (in their Base Case scenario) that C$94 billion on equipment and labor in the next decade will be spent in tripling the production of oil sands (currently 1.1 Mn bpd = 175,000 cubic metres) .According to the Alberta Energy and Utilities Board (EUB), remaining established reserves are estimated to be 28 billion cubic metres (174 billion barrels) at year-end 2004.

Yesterday Canadian Natural Resources confirmed a C$264 Mn order for just 23 new trucks from Caterpillar which will be delivered from 2008 onwards.

Canadian Natural's Horizon development 70 kilometres north of Fort McMurray, where Canadian Natural owns and operates leases covering 115,000 acres through lease arrangements with the Province of Alberta will use strip mining to recover bitumen, which is then refined into crude oil. The company, which has pledged to spend as much as C$6.8 billion by 2008 to develop oil sands, has forecast that production will reach as much as 110,000 barrels of oil a day by then.It is estimated that these reserves become usable at US$30-35 per barrel.

Currently, the major export pipelines from the region are at or near capacity. Market expansion and increased pipeline capacity will have to keep pace with the increasing oil sands output.A new pipeline or a major pipeline expansion to the west coast will be required to deliver crude oil to California and the Far East.

Limited water resources are also a brake on development limited, available supply from the Athabasca River could be a constraint on future expansion plans.River flows are low in the winter and the removal of large volumes of water during these periods is a concern.The water requirement ranges from 2 to 4.5 cubic metres of water to produce one cubic metre of synthetic crude oil in a mining operation. Mining operations use surface water and recycled water.

Natural gas requirements for the oil sands industry are projected to increase substantially from 0.7 billion cubic feet per day in 2005 to 2.1 billion cubic feet per day in 2015. Currently It takes about 34 cubic metres (1 200 cubic feet) of natural gas to produce one barrel of bitumen from in situ projects and about 20 cubic metres (700 cubic feet) for integrated projects.

Currently, the oil sands industry uses about 21 million cubic metres (0.7 billion cubic feet) per day of purchased gas, or about five percent of the Western Canada Sedimentary Basin production. By 2015, this increases to about 60 million cubic metres (2.1 billion cubic feet) per day, or nearly 12 percent, assuming gas production remains at 482 million cubic metres (17 billion cubic feet) per day.

Canadian Natural Resources Toronto share price over 2 yrs C$ CNQ: TO