Suncor Energy is the second largest producers of oil sands crude oil, following just behind Syncrude Canada Ltd.  Suncor Energy uses both methods of mining available for the oil sands, surface mining (much like a traditional mining operation) and in-situ methods, which are for deep extraction of oil sands product.  Suncor Energy is actually the only company in the Canadian oil sands that does both types of mining currently.

This company also is a fully integrated company, which many of the oil sands producers are not.  Suncor Energy works to remove the oil sands crude and then upgrades the product (removing the bitumen from the sands and other products) which transforms it into the conventional crude product mined in other areas of the world.  To do this, the oil sands product extracted from the ground ships to the company’s upstream facilities.  There, the upgraded product goes to the company’s refineries.  Those refineries are located in Sarnia, Ontario, Canada as well as in Commerce City, Colorado.  At those facilities, the crude is refined into the consumer products needed including petroleum products of all types including transportation fuel.

In addition to its Canadian oil sands production, Suncor also has a large natural gas operation in establishment located in Alberta as well as in British Columbia, Canada.  This production of these natural gases is in use, in part, to help fuel the costs of operation at the Canadian oil sands locations.  The oil sand production process requires extensive energy use, which is often one of the most complex processes for the producers because of the costs.

Suncor Energy was ranked at 254 of the Forbes Global 2000 list for is large corporation.  The company is run by John T. Ferguson who serves are Chairman of the Board and Richard L. George who is CEO of the organization.  In revenue, the company has in excess of CA $16 billion, which is a figure from 2006.

The company also runs a marketing of products from its organization and various service industries throughout the Ontario offices.  Some 280 Sunoco branded retail outlets are available throughout the world, which provides gas, and diesel fuels.  The expansiveness of this organization has made it highly attractive to investors.  Because of its total size and integration, its costs are lower than other companies without such organization structures.

One of the most astonishing bits of information for investors considering investments into the Canadian oil sands is this.  While the world is seeing a slow down or a steady amount of production of oil, especially in locations like the Middle East, Canada has the potential and likelihood of seeing a significant expansion of oil production.  Canada’s oil sands are the only current area in the world where production is going to increase over the next years.

According to Canada’s National Energy Board, production will continue to move forward in significant ways.  They did lower their estimates somewhat, but they still will likely see 3 million barrels of oil in play by 2015 as well as another 5 million barrels, or so, per day by 2020.  That is a significant amount of oil and the raise will keep producing companies’ ideal investments for the next years to come.  Currently, the Canadian oil sands are producing about one million barrels of oil per day.

There are locations in the world that will provide beneficial to the future of oil production in the world.  In fact, in Colorado there is a large area that would be an ideal investment opportunity for the future with the Colorado oil shale formation located there.  Yet, those investments are years off.  The technology and the ease of investment are not readily available in this area just yet.  Still, there are other opportunities including a large formation of oil in the Saskatchewan region.

In addition to the production ground of the Canadian oil sands and the later development of oil shale, there is a future for oil in the world.  You can see this in the vast number of technologies developed each year to make oil production faster and safer.  Mining methods are becoming more readily available; in addition, so new companies do have opportunities (just look at the Saskatchewan region’s recent booming area.)  Investors who want to be in the business of oil investing will find Canadian oil sands one of the best routes to take for today and in the years to come.

The question is, though, is now the right time to get into the Canadian oil sands investment business?  Since most people cannot buy into the companies directly or purchase and get them started on their own, you can invest in the trading of the producing companies, some of which are the best investments you will find.  Canadian Oil Sands or COSWF, is one of the best routes to take for a number of reasons.

One reason for this is due in part to the fact that the operations are underway and the increasing oil costs are helping to make the oil sands much more profitable than they were just a few years ago.  When the companies first got started, the costs of developing not only the plants for extraction, and the means of extraction (which is highly costly in and of itself) but the building of refineries which would need to convert the bitumen product extracted from the earth into conventional crude oil and then finally into usable product, the costs were high.  In 2003, the COSWF did not make a profit.  In 2007, it was able to secure a profit of US $1.3 billion in operating income.

What’s more, the development of the Canadian oil sands region continues to increase, just as demand does.  It is projected that the oil sands projects will raise to 3 to 4 million barrels per year removed.  This will feed into the world, which is craving oil.  Huge consumer markets are just getting started.  While demand in the United States is as strong as ever, markets like China and India are just taking off, and their demand for oil has grown to a proportion that has not allowed Saudi Arabia to keep up.

The bottom line here is that now is the ideal time to get into the process of investing the Canadian oil sands.  As of Friday, May 10th, Canadian Oil Sands added 41 cents, up to US $49.67.  Most investors see this as an ideal tool for investments well into the future.

Just next door is the Saskatchewan oil deposits.  What makes the process so interesting is that while the Alberta province is forcing royalty increases on its oil producers, Saskatchewan is not doing this at all.  In fact, the government heads there have said repeatedly they have no plans to increase royalties and welcome production companies (and investors) to their deposits of oil.  Therefore, this opens an opportunity for investment in two different markets in the Canadian oil war.

The Alberta oil sands region is feeling the heat, as several of the production companies are looking for opportunities to move into the Saskatchewan region.  In 2007, some $200 million was in use for oil and gas rights in Saskatchewan.  Alberta is working hard to fight against a potential loss in investors, though.  They are offering various programs and looking to develop new royalty programs that will help to encourage oil and gas development throughout the Alberta oil sands region.

For example, companies that drill wells that go over 2,000 meters deep will receive incentives.  Some $1 million will be offset royalties (or up to 12 months of royalties will be offset.)  This program will not come into play until 2009.  What is unique about that incentive is that any company can come in and do the drilling, and there is no hold back on these breaks even if there is no success found in the drilling process.

As an investor, you need to consider carefully where you wish to invest.  Do you want to go for the largest and most well known investment in oil in Canada, through the Alberta oil sands?  Are you looking for the easier and less expensive investment opportunity found in Saskatchewan?  Both are ideal investments and the fact that there is a bit of an oil war going may be an ideal way for investors to finally turn away from the Middle East and focus on oil at home (or close to home.) 

The Canadian oil sands trust is an income trust.  This means that it is an equity investment that is designed to provide cash flow from the operations to the unit holder.  One of the best benefits of investing in these oil sands in this way is that you can get the funds from the investment in a before tax manner, making them highly valuable and often times one of the best methods of investment.  This income trust is a good investment for many people.

Yet, there are risks to investing in an income trust such as this one.  Because the earnings and the cash flow from the business are the basis of the profits seen by the unit holders, there is a risk of losing money or not making any money.  These income trusts do not provide any type of fixed income payments like bonds do.  Rather, the risks can be high in many situations.

The Security

Like any type of investment, there are risks involves with the Canadian oil sands, yet there are many exciting opportunities as well.  The revenue produced by the Canadian sands is not at risk for stopping any time soon.  With the demand for oil ever increasing, it looks like there are significant opportunities for investment here.  While there is no guarantee with trusts, even in this type of income trust, there is some good opportunity here.

Getting Involved

You cannot purchase units directly from the Canadian Oil Sands Trust.  Rather, you must purchase them through a financial advisor.  The opportunities for investments are there through these brokers.  In addition to investing through financial advisors, some banks provide the Canadian oil sands as one of their investment vehicles.  Therefore, you may want to talk to your bank about putting your investments into this market.

Investing in the Canadian oil sands is a good opportunity for many people.  With the world’s dependency on oil so strong, it is undoubted that it will become one of the most important sources of fuel in the long term.  This income trust is one of the best ways for you to get into this market and it allows you to make a sizable investment in one of the worlds most sought after resources: oil.

The Canadian oil sands are increasing their production levels of crude oil, namely the oil sands bitumen product.  While there are millions of barrels of oil being removed every day, there is an increasing concern that there could be too much being pulled from the reserve, which cause a large supply to be available which in turn could would cause pricing to plummet.  To the investor, this is a very worrisome situation, but it does not have to be.

Where is the Concern?

Some very large and demanding markets would happily cut into the share of the barrels of oil removed from these oil sands.  In addition, while technology continues to increase, there could be a drop in the demand for oil, especially as cleaner technologies become more readily available to the public (and the public becomes more readily acceptable to them.)  Corn and other fuel methods will become a larger threat to the oil industry in the future, but this does not mean that the oil spigot should be turned off.  In fact, that could be the worst mistake made.

The fact is, at the current rate of supply, the world will run out sooner than later in terms of crude oil.  Saudi Arabia’s amount of oil is far less (it is believed by some) than what the country’s leaders are willing to tell.  Additionally, there are markets that are expanding even farther and faster that are becoming even more in need.

The Canadian oil sands producers are working hard on keeping the right amount of oil coming from the reserve.  They have developed new working markets for the oil, too.  Some of the regions they are now opening into include the Midwest and the Gulf coast regions of the United States and into Asia as well.  Developing countries like China and India have an increasing demand for oil that is being increasingly difficult to meet by other producers. 

Investors concerned with the amount of production and the increases set to happen into the future can learn more about the amount of oil produced through the Canadian Association of Petroleum Producer’s reports, which are provided regularly to keep the public, and investors, informed.

Colorado has a rich deposit of oil shale, a product much different from that found under Alberta’s land.  Some may not know about the oil shale found in Colorado, but it is one of the best locations in the world for rich oil deposits.  You may be asking then, “Why is the US so determined to buy foreign oil when there is such a large deposit located in Colorado?”  The reason is simple.  Oil shale is not the best product for oil production, because of the difficulty in production and refining to the level that is required.

By comparison, oil shale production in the world is limited to just 30,000 barrels each day.  The oil sands located in Alberta, Canada, on the other hand, produce enough oil to provide Canadians with 40 percent of the total crude oil production they need.  In the next 10 years, it is an estimate that Canadian oil sands will produce 4 billion barrels of oil a year, much larger than the amount the Colorado oil shale will produce.

That does not mean you should not invest in the Colorado oil shale development.  Most investors believe the technology to get the Colorado oil shale development up to a more usable level is still years away.  Yet, the companies that you can buy into to get a piece of this investment are forming and they are looking for those ground floor investors that stand to make the largest investment of all.

You can learn much more about the Colorado oil shale.  It is located in Green River formation in the heart of Colorado.  Additionally, there are similar deposits of oil shale located in rural Utah and Wyoming, both of which are additional sources of investment potential.  It is an estimate that there are two trillion barrels of oil found in Colorado, Wyoming and Utah combined, all in the form of oil shale.  Still, investors are turning their investment dollar to the Canadian oil sands where potential is currently in play.  Oil production is an ideal investment tool in either Colorado or in Canada.  The goal you have is to determine what type of investment you want to get behind.

In 2007, the Alberta government put in place the Energy and Utilities Board (EUB) and gave them the job of determining more information on the oil available.  They estimated that in 2007, there were about 173 billion barrels of crude bitumen that are recoverable from the three Alberta oil sands regions.  That is, this is the economically recoverable product (due to the high costs of extraction of deep levels of the bitumen.)  This was taken into consideration based on the US $62 per barrel cost in 2006, up to the likely rise of US $69 per barrel by 2016.  It was complete based on the same technology in play today.

This study showed that only about 10 percent of the amount of bitumen located in the Alberta oil sands could be in use.  The government determined that the Athabasca oil sands located here contained about 35 billion barrels of surface mining product.  There were an additional 98 billion barrels of bitumen recovered using in-situ methods.  Although there was some doubt in the information provided in this area, it is widely believed by the international oil industry that the figures are accurate (though many believe there is much more available for mining.)  The figures of the reserves placed the Canadian oil sands region in Alberta to be the second largest in the world, right behind Saudi Arabia.

There is a lot of debate and concern over the estimates recovery rate in the Alberta oil sands.  The estimates given were assuming a recovery rate of about 20 percent of bitumen in place.  This means that only 20 percent of the amount of bitumen located in the Alberta region can be in use.  Yet, this is not the recovery rate that is believed to be accessible by the producers themselves.  The oil producers believe that about 60 percent of the bitumen located here are removable with very little effort through the steam assisted gravity drainage method (SAGD) which would drastically change the picture.

Since 1967, only about three percent of the bitumen has been extracted from the region.  When considering that the producers are able to increase the number of barrels per day they are extracting to 3 million per day by the year 2015, this means that the Athabasca oil sands reserves would provide crude oil, at that rate, for the next 170 years.

Historically Forward

In 1967, the first commercial organization to open a plant in the region did so.  It was the Great Canadian Oil Sands Limited Company, which later became Suncor Energy.  At that time, it produced just 30,000 barrels per day, a fraction of what it produces today.  Nevertheless, the synthetic crude oil began flowing.  Unbelievably, the decline in world oil prices just after this hit hard and kept the area from being fully under development for some time.  In 1978, the second company got to business after the oil crisis that happened in 1973.  Syncrude is still a powerful player in the Canadian oil sands region.

Oil prices peaked in 1979, which caused the National Energy Program to hold up any foreign investments into this industry, a devastating blow to many would be investors.  Because prices began to fall again and would hit very low levels in the 1980’s, a third mine was opened at a delayed rate.  It was under operation by Shell Canada, but did not official get into business until 2003.

Since this time, though, the demand for oil has grown incredibly, and oil prices are at an all time high.  Each of the mines that are operational have increased the amount of crude oil they are producing, which is an effort to improve the skyrocketing demand shortage.  New mines are also in the works to help improve the amount available.

In 2005, the Alberta Energy and Utilities Board provided production as follows:

• Syncrude Mine:  Production at 262,000 barrels per day
• Suncor Mine: 195,000 barrels per day
• Shell Canada Mine: 169,000 barrels per day

A year later, the amount of oil produced has increased from 760,000 barrels per day (in total including the In Situ Projects) to 1.126 million barrels per day.  Increases for mining are likely to continue.

When you look at all oil produced by Canada, this is 47 percent of it.  The oil sands are the source of 62 percent of Alberta’s total oil production as well.  What’s more, the Canadian oil sands not nearly tapped yet and the government in Alberta believes these levels can rise significantly into the future.

Oil Sand Companies Explored

Three larger oil sands operations are engaged in mining in the region of the Alberta Oil Sands.  Other mining locations for oil in Canada do exist, though the Alberta region is the largest oil sands production in play.  The three operations include the Syncrude Canada Limited operation, the Suncor Energy operation and the Albian Sands operation.  Albian Sands is under the ownership of Shell Canada, Western Oil Sands Ltd and Chevron.

A number of projects are in the works or are in operation here.  One of them is the Suncor Energy’s operation called Steepbank.  They also have millennium mines in operation.  These operations produce about 263,000 barrels of crude oil from the oil sands each day in surface mining.  They also have an operation of in-situ projects (which is the deep underground excavation of the bitumen.)  This method produces another 140,000 barrels per day of crude oil, with increases happening yearly.

One of the largest producers in the region is Syncrude.  It offers two mines currently.  The Mildred Lake and the Aurora mines are in play for Syncrude.  Together, they produce up to 360,000 barrels of crude oil per day.

Nexen is another large operation.  This company’s production is in the form of in-situ methods.  Currently, it is producing about 70,000 barrels per day in crude oil, but over the next 10 years, they plan to increase production to some 240,000 barrels per day.

Shell Canada has an operation here as well.  The Muskeg River Mine is one of the largest and is well known.  It produces about 155,000 barrels per day of crude oil.  Shell Canada also has another mine located in the Fort Saskatchewan part of the province called Scotford Upgrader.  The company also has another mine, called Jackpine, which is set to become operation in the next few years.  This company’s goals include production of a total of 500,000 barrels per day when all three units are up and running.

The Canadian oil sands projects are large and they are full with exciting opportunities for newer companies.  In fact, there are other projects in the works.  The Alberta Oil Sands industry has planned to be producing 4 million barrels of crude oil per day in the next decade.