Investing in oil sounds like an ideal situation if you are looking for an opportunity, but avoid investments in the Middle East or otherwise outside the North American continent. You can do this because one of the largest and richest supplies of oil is located in Canada, just north of the United States border. The largest supply of oil is located in Alberta and commonly known as the Alberta oil sands. This heavily rich area contains three major deposits of bitumen, which is a very thick and heavy form of crude oil. It can be, and is being, turned into consumer based oil products at an ever-increasing rate. However, the oil sands in Alberta are not the only opportunities for investments into the Canadian oil sector.
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.)
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