As the Globe and Mail reported today, the Alberta government has issued its first ever restriction on the amount of water that oil sands producers can withdraw from the Athabasca River.   I don’t know the extent to which this could limit production by the four companies that are impacted, which includes Canadian Oil Sands Trust (COSWF).  But it seems like a straw in the wind.   Such limits represent a risk to most oil sands producers and to the potential future rate of flow of oil from the oil sands.  …

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Stocks are clearly in panic mode; prices no longer correlate remotely with valuations.  My son asks me as the market tanks another 500 points who is buying.  Someone has to be buying. It’s a brilliant question.  I suppose the answer is that people who think the price being offered discounts all the risks of continued panic are buying.  So the price must be dramatically lower - that’s the only price able to find a buyer. 

What started the stock market tanking is the global credit market chaos about which we seem …

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The July 7, 2008 Oil and Gas Journal features several pieces on the Canadian oil sands.   I’m not going to attempt to summarize it all; much is technical information regarding the various ways to treat bitumen which is what you get out of oil sands before starting to refine it.   Interested persons can get a copy on line or by mail.

Let me simply summarize a few points that are relevant to  investors. 

  First, total Canadian oil sands production is expected to grow from the current 1.32 mb/d to 3.23 mb/d …

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I would direct you to the end of this fascinating interview with the CEO of Canadian Oil Sands Trust, the EIS portfolio’s largest single position.  In it he makes astoundingly positive assertions about both water use and land reclamation. Q&A with Marcel Coutu of Syncrude Q&A with Marcel Coutu of Syncrude by Peter McKenzie-Brown Syncrude’s Chairman of the Board delves into operations, the environment and the demise of oil around the world. This article appears in the July 2008 issue of Oilsands Review. Canadian Oil …

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Tsunami Investing ….

      Why Are Oil Prices Rising?  “The Answer” Comes into Focus

June was a good month for energy stocks and for the EIS portfolio but the broad market tanked.  The impact of high energy prices  on both inflation and consumer discretionary spending is being reflected in stock prices.  Energy pressures present a special risk to economic stability by coming on top of the twin collapses in the credit and real estate markets.

So far Mr. Market seems able to distinguish between the very healthy energy sector and the tenuous economy.  …

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The S.E.C. appears to be ready to issue long overdue changes to their regulations regarding the reporting of oil and gas reserves.  One of the major impacts will probably be the ability of oil sands to be counted as reserves, which would make such properties substantially more feasible for publicly traded major oil companies to acquire. SEC proposes new oil and gas reporting rules Fri Jun 27, 2008 10:36am BST WASHINGTON (Reuters) - Changes in the rules on how energy companies report their reserves, proposed by the U.S. Securities and …

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If I were asked to recommend an energy advisory team for the next President I’d start with Robert Hirsch.   Hirsch is a defense planning expert who has headed up major consulting assignments for the Defense Department among other clients and in 2005 published a major study of the impacts and potential mitigation of Peak Oil.  It famously forecast that a successful transition from oil dependency would need to start 20 years before oil production peaked. In the interview below published on a web site operated by Allianz, …

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Canadian Oil Sand Trust (COS.WF) report of Q1 results demonstrates the power of higher oil prices to leverage its cash flow.  Based on an average WTI price of $97.82, up from $58.23 in 1Q07 (+68%), operating cash flow rocketed ahead 119%, to C$0.98 vs. C$0.42 per share despite plant outages that caused unit sales to fall by 9%.  

The company’s decision to boost its quarterly dividend by 33% to C$1.00 per share demonstrates its confidence in the continuation of strong cash flow.  Since the company cannot control the price of …

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An extensive research report published in the Globe and Mail discusses the importance of water to extracting oil from the oil sands.  A key assertion is this: ” The degree of water use directly reflects the quality of ore recovered, says Bruce Peachey, president of New Paradigm Engineering in Edmonton. “We are presently mining the best ores. But as clay content increases, the volume of water needed in production will increase. So this is the good time for water.”

Water may well be a limiting factor in the growth of oil …

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March 10, 2008 at 10:17 AM EDT CALGARY — — Canadian Oil Sands Trust [COS.UN-T] said recoverable resources at the Syncrude oil sands project amounted to 12.7 billion barrels, up from prior estimate of 9 billion. The increase in estimated recoverable resources “reflects the reporting of a new category, known as prospective resources, as well as mine pit design criteria that expand the pit sizes in some areas, consistent with the current business environment,” the company said Proved plus probable reserves were 4.9 billion barrels, largely unchanged …

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2008 Thus Far: A Preview of Coming Attractions

My concern has been that at some point shortages of oil will cause a falling-stocks, rising-oil phenomenon that will crush my oil related stocks along with the whole market. 2008 has started like that. Oil was up 6.34% as of 2/29 (per the ETF symbol OIL) but stocks were down 8.5% (in terms of the S&P 500 ETF symbol SPY). For oil-related stocks, the falling stock market trumped the rising oil market, as I have expected. IYE, a broad-based oil-stock ETF, was down …

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Canadian Oil Sands Trust (“Canadian Oil Sands”) today discusses the impact of Crown royalty changes for oil sands projects announced yesterday by the Alberta government. read full article

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Suncor Energy Inc. (SU) and Syncrude Canada Ltd. have individual royalty deals with the government of Alberta, which set the two oil sands giants apart from the rest of the industry read full article

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Canadian Oil Sands Trust (COS) owns 36.74% of Syncrude, Ltd, one of the largest and most developed oil sands operations in Canada. Sycrude has a record of profitability and has already achieved construction of the bulk of its long term capacity goals, including in July an upgrade that increased output capacity by 40% to approximately 350,000 barrels per day, or about 129,000 for COS. A de-bottlenecking upgrade will add another 50,000 b/d to capacity in five years and a final planned expansion will bring production to 500,000 b/d in about …

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Oil Price Expectations Rise…

But Inventory Levels Rise Too.

Two Ways to Cure Oil Dependency…

And Two Ways to Gain from $100 Per Barrel Oil

The steady march of oil from $50 per barrel to over $70 since January seems to have broadened and strengthened the confidence of oil bulls. As the price advances, there is also more frequent and widespread discussion of Peak Oil, a principle underpinning of price bullishness. The kind of dramatic talk one can hear these days is illustrated by the following from Kurt Wulff, the respected chief of McDep Associates:
“As for one of the fundamental factors behind oil’s price rise, Mr. Jim Buckee, retiring Chief Executive of Talisman Energy (TLM), showed a hand-drawn graphic to a small group at the end of the day illustrating a recent accelerated decline in production of the world’s largest oil field, Ghawar, despite a parabolic increase in oil field equipment and service spending by Saudi Arabia.”

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