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Oil sands visit was not a shopping trip, says Buffett

Jeffrey Jones, Reuters via Financial Post
CALGARY, Alta — Warren Buffett toured Canada’s oil sands with his friend Bill Gates this week to understand how the resources are developed, but the billionaire investor said on Friday he had no plan to buy into the sector.

In an interview on CNBC television, Mr. Buffett said he and the Microsoft co-founder discussed their interest in the oil sands a few months ago, and agreed they would get a better education with a first-hand look than just reading about it.

The visit on Monday led some in the Canadian oil and investment industries to speculate that Mr. Buffett, chairman of conglomerate Berkshire Hathaway Inc., and Mr. Gates could be readying to invest in the oil sands.
(22 August 2008)

Buffett, Gates, mutant fish frame oil sands debate

Jeffrey Jones, Reuters
In the high-stakes battle between the oil industry and environmentalists over the image of Canada’s oil sands, it appears a pair of multibillionaires beats a two-mouthed fish.

The week started out tough for oil sands producers, whose shares had been beaten down as crude prices skidded and projects suffered more cost overruns.

Three environmental groups quit a northern Alberta oil sands development advisory body that also includes government and industry representatives, saying it had lost legitimacy.

Then reports surfaced that children had reeled in a fish with two jaws from a lake downstream from where tens of billions of dollars worth of projects are pumping synthetic oil.

But by midweek, the mood changed. A stealth visit to Canadian Natural Resources’ new Horizon oil sands mining project by two of the world’s richest men, Bill Gates and Warren Buffett, overshadowed all.
(22 August 2008)

Mutated fish alarms delegates at northern Alberta water gathering

CBC News
Days before a conference on water quality began in Fort Chipewyan, Alta., last week, residents say a strange fish with two mouths was found at the nearby lake.

The deformed fish, which residents say children had caught off the dock at Lake Athabasca, has since been turned over to park wardens at Wood Buffalo National Park. Some residents, including officials from the Mikisew Cree First Nation, took photographs of the fish over the weekend.
(18 August 2008)
See photo of the fish at the original. As one commenter wrote: “That’s one ugly fish!”.

A New World Order?

Peter McKenzie-Brown, Language Matters
“Alberta became the Bolivarian province of Alberta when you decided to take more royalties from the oil companies,” Luis Vierma told a scowling crowd from Calgary’s petroleum community last June. “This made Venezuelans very happy.” The reference, of course, was to Simon Bolivar – the 19th century revolutionary whose leadership helped to liberate much of South America from the Spanish monarchy. The speaker was the E&P vice president of a national oil company – specifically, that of the Bolivarian Republic of Venezuela.

Vierma’s cheeky comment garnered a few chuckles from his audience, but not many. This articulate man – he was educated and for some years worked in the United States – described a world order which at first blush doesn’t seem to suggest a happy future for western-style international oil companies. However, this commentary suggests that it may not be all that bad for private-sector oil companies, and that the changing world has huge implications for our oilsands.

… According to academic Michael Klare, PdVSA is number six among national oil companies, with control of 6.6% of the world’s proved reserves. However, that number does not take into account the vast potential of the Orinoco oil sands.

When you factor in the oilsands, the numbers become staggering. Start adding the resource potential of bitumen and heavy oil from Canada and extra-heavy and heavy crudes from Venezuela and, Vierma said, “(between us,) Canada and Venezuela will have more than half of the oil reserves around the world.”

How can Canada benefit by working in Venezuela? The country is looking for foreign partners to develop offshore properties that are prospective in terms of both oil and natural gas. In the oilsands, the two countries need to share oilsands technology.

… But what about the new world order? The argument that the world has fundamentally changed is very strong. NOCs are unquestionably dominant in the politically risky parts of the world, and that trend is unlikely to change. In addition, geopolitical considerations (including human rights issues, corruption and worries about Venezuelan-style nationalization of assets) are keeping international oil companies away from many of the regions that are left.

Does this mean the future belongs to PdVSA and other NOCs, as Hugo Chavez and others have suggested? The answer is almost certainly no. Rather, international companies will increasingly focus on development in areas where risk is minimal and potential is large. Clearly, much of that activity will take place in Alberta’s oilsands.

… This reality suggests another vision of the new world order. Increasingly, perhaps, international oil companies will need to retreat to low-risk, high-potential areas like Alberta in North America, Europe, Australia and other “safe” parts of the globe. In a future of declining conventional production, they will prosper by applying their considerable intellectual, technical and capital resources to oil sands and shale oil development, and to the production of gas from tight sands, shale and hydrates.

This article appears in the September 2008 issue of Oilweek magazine.
(23 August 2008)