SOURCE: AXcess News

March 03, 2006 11:49 ET

Canada's Answer to OPEC

RENO, NV -- (MARKET WIRE) -- March 3, 2006 --Canada, long known as an energy-rich nation, may be becoming North America's answer to OPEC, thanks to the growing number of oil companies developing Alberta's oil-rich sands that are second only to Saudi Arabia in reserves.

Covering an area equal to the landmass of Florida, the oil-rich sands hold 176.1 billion barrels of proven reserves with the richest deposits located in the McMurray Channel. Thursday, Patch International, Inc. (OTC BB: PTII) announced that it acquired a property in the McMurray Channel through a consortium the oil exploration company formed with other junior energy companies while optioning an adjoining property as well. Patch holds a 75 percent interest in the consortium. Shares of Patch rose over 16 percent Thursday on the news.

Patch's chief executive David Stadnyk said, "This acquisition far exceeds our expectations in terms of acquiring a prime oil sands property in the heart of the producing McMurray Channel." Stadnyk pointed out that the property carries "an estimated 51.28 million barrels of probable and possible recoverable oil in place."

Behind Stadnyk's company is a line of oil companies already working oil sands in Alberta. Production from 29 companies now operating in the three regions exceeds 1 million barrels of oil per day, most of which is shipped to U.S. markets. Oil sands backers project that production will triple to near 3 million barrels a day by 2015. That would make it the world's fifth largest crude oil producer.

Canada is already the United States' largest source of foreign oil, providing 18 percent of its current supply. But oil sands promoters see U.S. imports growing.

With the price of oil soaring, U.S. officials have begun taking oil sands tours. Treasury Secretary John Snow visited in July 2005, and congressional staffers and Energy Department officials followed in August.

Cumulatively from 1996 to 2002, about $24 billion was invested in the oil sands industry. Over $70 billion of further investments in oil sands projects have been announced by industry for the period 2003-2020.

Kinder Morgan is among those buying in. It purchased Terasen Inc. for $5.6 billion last year, which owns oil sands pipelines, including one that extends from Alberta to Canada's West Coast -- and to potential new customers in Asia.

Rick George, CEO of Suncor Energy, took CBS' "60 Minutes" correspondent Bob Simon into his strip mine for a tour last January. Simon asked, "The oil sands look like a very rich, pliable kind of topsoil. Why doesn't oil come out when squeezed?" George replied, "It may look like topsoil but all it grows is money."

Clive Mather, Shell Canada chief, told Simon, "This is a very, very big resource." Eight times the amount of reserves in Saudi Arabia, "60 Minutes" outlined.

Patch International's Stadnyk has the same enthusiasm as Mather and George, but his company is the first to form a consortium, creating what may be Canada's answer to OPEC, the Alberta Petroleum Exporting Companies, or APEC.

While AXcess News coined the term APEC, it aptly describes what Alberta's oil sands region is and the growing number of companies entering into oil exploration and development there.

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