Oilsands to lead world by 2010

Times Colonist (Victoria)
11-Jan-2006

CALGARY (CP) -- As conventional oil reservoirs deplete rapidly around
the world, Canada's oilsands will be the biggest contributor to new
global supply by the end of the decade, predicts CIBC World Markets
(TSX:CM).

And in an energy market where state-owned firms control a major portion
of global daily production, the oilsands provide one of the few
remaining growth opportunities for investors, chief economist Jeff Rubin
said Tuesday.

"All of the net increase in oil production this year is expected to come
from non-conventional sources," Rubin said in a release.

"While deepwater oil is the primary source today, we forecast that
Canadian oilsands will become the single biggest contributor to
incremental global supply by 2010."

The Toronto-based bank said a study of 164 new oil fields and projects
around the world shows that the price of oil will continue to rise over
the next three years if global demand does not begin to wane.

As such, Rubin believes oil prices this year will eclipse last year's
record high of $70.85 US per barrel, reached as major oil and natural
gas infrastructure in the Gulf Coast was being pounded by two major
hurricanes.

Rubin also predicts that oil could rise to as much as $100 US per barrel
by 2007, giving energy companies a vast amount of cash in which to
invest in large but expensive projects like the oilsands.

"Not only is depletion significant, but it is also accelerating, forcing
more and more reliance on non-conventional sources of supply, such as
Canada's vast but largely undeveloped oilsands," said the report.

The CIBC study says once depletion rates are factored in, global
conventional supply "seems to have peaked in 2004."

It says more than 60 per cent of the 3.6 million barrels of new oil
production expected to come on stream this year will simply offset
depletion from existing fields like the North Sea and Kuwait.

After depletion, new supply is expected to grow by less than 1.5 million
barrels per day in the next two years, and by less than a million
barrels a day in 2008.

Northern Alberta's oilsands are already the focus of massive amount of
development, with about $100 billion worth of projects planned over the
next two decades.

Production is also expected to jump from the current one million barrels
per day to upwards of three million in the next decade.

Times-Colonist