Dirty oil to Cleaner Energy, What is Next?

What is Dirty Oil in Alberta oilsands

Dirty oil or tarsands in the Alberta oilsands industry is what environmentalist are all worried about. Dirty oil refers to the remains after the removal of the oil from the oilsands. Alberta oilsands accounts for the only commercially mined oilsands in the world. Though there are other oilsands reserves, in the United States and Venezuela, Canada has the only commercially viable development. Located in Northern Alberta in the Athabasca region, Alberta oilsands companies such as Suncor, Petro Canada, and Husky Energy have been extracting the dirty oil for over 30 years. With the improvement in technology and the rising US dollar per barrel cost of oil, Alberta oilsands represents the worlds largest growing oil reserves. Dirty oil is what the environmentalist focus on, however, when they discuss this potential. The Alberta government and the Alberta oilsands companies disagree with the environmentalist and cite reasons such as the improvement in extraction technology and the already present dirty oil in the region. The fact is dirty oil exists in Northern Alberta’s Athabasca region and the oilsands companies are not making the situation any worse. However, in the eyes of the environmentalist they measure the green house gases created by dirty oil production and the environmental impact on wildlife such as ducks who are dying as a direct result of exposure.

What types of Clean energy alternatives are there?

But if dirty oil is not the solution for the worlds energy consumption then what other clean energy alternatives are there? We have solar energy which harnesses the power of direct sunlight to convert the heat to usable power. Solar energy is clean and renewable. The harnessing of solar energy does not create greenhouse gases and solar energy is a renewable resource. While solar energy technology has been available for more than two decades, the production of solar energy has not been cost effective or commercially viable up to the present time. We see limited uses of solar energy as a clean energy alternatives by homeowners who place solar panels on their roofs to supplement their home’s power consumption needs. Some firms have been selling solar energy packs which can be used to recharge batteries on cars or boats and even provide hot water for a shower in the wilderness. Another clean energy alternative is wind power. The clean energy alternative created by wind is through the use of wind farms that harness the power of wind to turn turbines and create energy that can be stored or transmitted for direct use. Wind energy is a growing clean energy alternative but currently still plays a small role in clean energy consumption in the world. One of the requirements of using wind energy is the availability of lots of land in a fairly windy environment. Afterall we need wind to turn the turbines to create the energy. The cost of wind turbines and the need for constant replacement is also one of the reasons why we don’t see a large development of wind turbines in every city.

Dirty oil or clean energy alternatives, who will win the Energy wars?

Dirty oil or clean energy alternatives, who will win? The answer is not as simple as stating that one energy is better than the other and we should stop using one for the other. The world is a bit more complex than this and dirty oil makes money for many investors as well as provides a reliable, fairly inexpensive source of energy. Dirty oil has a limited supply but this supply will stay last for more than a few hundred years given current technology. With the improvement in technology we may see dirty oil last even longer and burn cleaner than it is currently doing. Clean energy alternatives such as solar energy and wind energy will depend greatly on the improvement in technology in helping lower their production cost and raise their output. The ability to provide a commercially viable source of clean alternative energy is the big hindrance in the rapid development and acceptance of this apparent valuable resource. It is interesting to note that even Alberta Oilsands company Suncor produces clean energy using biofuel and is wind power. Suncor is an integrated energy company and uses oilsands, biofuel, and wind power as the tools to provide energy to the world.

Alberta oilsands companies: Suncor buys Petro Canada

Why has Suncor bought Petro Canada?

Suncor has proposed to buy rival Petro Canada to form Alberta Oilsands largest oil company. The $15 billion US ($18 billion Canadian) stock purchase by Suncor of Petro Canada would be the second biggest purchase of an Alberta oilsands in the history of oilsands mergers and acquisitions in Alberta Canada. The purchase is said to help Suncor energy slash costs by reducing redundancy and become a more focused Alberta oilsands company. This is crucial in a period where we see oil prices at lows of $30 to $40 US per barrel and without any idea of how long US oil prices will remain at this level. Survival in the long term is what Suncor has been really good at and that is why they are Canada’s largest integrated Alberta oilsands company. This is an all-share deal and rates as the biggest Alberta oilsands takeover in history. The deal will help Suncor save over 1 billion in annual savings, a significant amount considering the limited access to financial resources in the current economic environment.

Is the Alberta Oil sands cheap?

The purchase of Petro Canada by Suncor begs the question of whether it is a good time to buy other Alberta oil sands companies. Are the Alberta oil sands cheap at this moment in time. Like Alberta real estate in Edmonton and Calgary which has seen a fall of over 30 percent in the last year, oil sands companies have likewise seen significant declines. The stock market, Toronto Stock exchange, Dow Jones, and S&P 500 are all significantly down over the last year and every stock that trades on the exchange has been brought down. It is more a lack of confidence in the financial markets as a result of the global financial crisis that is creating this current buying opportunity. But if Alberta oil sands is cheap right now, who can financially afford to buy it right now. There are very few big players in the Alberta oil sands industry who have also not been significantly hurt by the global financial crisis. Surviving the short term is a key priority for all Alberta oil sands companies despite any cheap buys. We may see other global companies from the Middle East or Asia (China in particular) make a serious offer for cheap Alberta oil sands companies. The Suncor offer for Petro Canada does seem to indicate that it is indeed a time for cheap Alberta oil sands purchases. Suncor, however, will also see significant savings in the purchase due to cost reductions which is an additional incentive for the current purchase.

Are there other Alberta oilsands companies going to be purchased soon?

What other Alberta oilsands companies are going to be snapped up in the next 12 months. It is only a matter of time before the buying spree continues. With the firming of US oil prices at $50 US per barrel, there seems to be more confidence in the medium term for Alberta oilsands companies. The stock market has recovered significantly in the beginning of April 2009 and this points to a growing consumer confidence. Alberta oilsands companies that may be bought first will be the bargain shoppers who are looking for companies with great pieces of land in the Athabasca region but short on financial capital. Companies such as BA Energy will be one of the targets of these Alberta oilsands investors who are eyeing the potential of owning prime Alberta oilsands real estate. The long term trends of the oil industry are still rosy as the demand for oil will continue to be much higher than the annual supply. This and the inability to find alternative cheap sources of energy is the reason that conventional oil will continue to rule the world.