Petro-Canada has interests in oil sands projects that offer sizable, long-lived resources. In high oil price environments, these projects can generate significant free cash flows.
Big Oil is hungry for Canadian Oil sand. But it is an environmentally ethical decision? When it comes to easing the energy crisis, most politicians and many Big Oil companies have the same mantra: the more oil from sources other than the Middle East and other unstable regions, the better. And "the next big thing" in Big Oil could be the oil sands in Canada's province of Alberta. The Economist reports on why Canadian oil sand is suddenly looking better to Big Oil:
Analysts at Citibank reckon the oil price needs to remain above $40 a barrel to make the development of the oil sands worthwhile. ...There is no exploration risk: the oil is definitely there. Once up and running, oil-sands mines produce a steady flow of oil for 30 years or more, whereas the output of more conventional fields is much less predictable. Best of all, the oil sands are in Canada, a hearteningly moderate and stable country.
Indeed, oil is unlikely to fall below $60 a barrel in the near future, and this has Big Oil companies, including Exxon (XOM), Chevron (CVX), Shell (RDS-B) increasing their investments into this region. Big Oil is hoping that the investment will ultimately result in a regular supply of oil from a stable source, reducing energy dependence on the Middle East.
