THE petroleum-drenched sands of Alberta (Canada) are going to be the greatest oil deposits of North America in future, according to a recent international press report.

At a time, when world oil output is lagging behind the global demand for oil and security concerns hinder efforts to increase crude oil production, the aforesaid deposits offer a silver lining in the cloud and may attract major oil producers interested in making money by separating oil from earth.

Rising international crude prices are reported to have made the work on the aforesaid oil deposits viable. It reportedly costs $12—18 a barrel to produce crude oil out of the sands.

Since the current international prices for crude oil stand around $60 a barrel and there seems to be hardly any likelihood of the price falling below $40 – 50 a barrel in the foreseeable future, the oil giants may have no hesitation in investing their money into this project.

The proven recoverable oil reserves at Alberta are estimated at as much as 178.8 billion barrels, compared to 261.5 billion barrels of Saudi Arabia, 125.8 billion barrels of Iran, 115 billion barrels of Iraq, 101.5 billion barrels of Kuwait, 97.8 billion barrels of United Arab Emira-tes, 77.2 billion barrels of Venezuela and 60 billion barrels of Russia. Thus, oil reserves of Alberta are estimated as second largest in the world and they come next only to Saudi Arabia.

Companies already working on the project are reported to have tripled production since 1999 to 1.1 million barrels a day. Nearly, all of it is meant for the US market. An additional quantity of one million barrels a day is expected to enter the market within the next five years. By 2015, production could rise to three million barrels a day and by 2030 to as much as six million barrels a day.

How do the energy companies extract oil from the oil sands reserves? In the first instance, oil-soaked earth is mined, crushed and then mixed with water. This mixture is sent to a separating machine, where the oil called bitumen settles out. The bitumen is heated in a furnace. Then, the vapours are collected, cooled and condensed, resulting in the formation of oil. After some more processing, oil can be sent to a refinery.

However, much of Alberta’s reserves lie too deep for strip mining. These deposits require the injection of steam deep under the ground to soak the bitumen. After several weeks of soaking, the oil-water mixture is pumped to the surface, where it is processed like bitumen collected through strip mining.

While the Alberta oil sands promise a potential oil source for future, environmental concerns threaten to become a constraint at some stage in future. However, the federal and the provincial governments are confident that environmental regulations would not block the operation and further expansion of the project, despite Canada’s pledge to cut emissions under the Kyoto Protocol global warming agreement. The prize emanating from the project is so tempting – for the oil companies as well as for a government eager to earn tax revenue – that it may not be possible for any one to stop the project.

Another concern is about the supply of labour. Workers may be reluctant to move to the site of the project due to prohibitive rent and lack of facilities. If the oil companies plan to produce three million barrels a day of crude oil within the next 10 years, they will have to hire 40,000 workers. At the moment, wages are reported to be increasing at an average rate of eight per cent a year for the 12,000 workers working on the aforesaid project in northern Alberta. Even now the oil companies are reportedly hard-pressed to find welders, plumbers, project managers and other skilled workers.

The project is owned by Syncrude Canada Ltd. The Imperial owns 25 per cent of Syncrude and Exxon Mobil Corp own 69.6 per cent of the Imperial.

There is no doubt that both the United States and Canada will benefit from the project. The US will be able to meet part of its requirement of imported oil from its next-door neighbour, while Canada will get a reliable customer at hand, willing to buy increasing quantities of oil from it for an indefinite period.

The US oil security will also be greatly boosted since the oil reserves are estimated to be the second largest in the world and oil production is, also, expected to go on increasing with the passage of time.

However the question is, will the oil production from the Alberta oil sands have a favourable effect on the global oil market? The chances are that it will have a stabilizing effect on the international crude prices, once production from the source gains momentum.

The addition of 178 million barrels to the proven recoverable world oil reserves, together with an increase of one to two million barrels in the daily oil production within the next few years will be a significant development and it should definitely have a favourable impact on the global oil market.

The news has been particularly highlighted in the US media, which has expressed the view that the new source will be of immense help in easing the oil supply position in the US and stabilizing local oil prices so that the Americans would be able to continue driving their cars and their sports utility vehicles (SUV’s) without any difficulty.

However, if the supply position eases in the US, that will definitely release pressure from global oil supply elsewhere. It may be hoped that the global oil market will not remain as volatile as it is now and that an era of price stability may take its place, after oil production from Alberta picks up.