We have said before how in the long term OPEC doesn’t want the price of oil to be too high. And the oil sands of Alberta Canada are a case in point.
There’s a lot of oil lurking in Alberta, perhaps more oil than has yet been discovered from the rest of the world put together. But it’s expensive stuff, and yet, according to Shell, as long as oil is over $30 a barrel, it’s viable.
More to the point, practise makes perfect, and as the oil companies develop the oil sands, the price of extracting it should start to fall.
In Canada, however, Royal Dutch Shell doesn’t own all of Shell. Twenty two percent of shareholders in the Canadian subsidiary are independent, but not for much longer.
The company is forking out £3.7 billion to buy then out.
But, is this a bet on oil sands, and an investment for the future? Or is it something else?
The Canadian subsidiary owns 60 percent of Athabasca Oil Sands, and it’s thought this field has the potential to produce half a million barrels a day. And remember, after the fiasco of two years ago, the company has a lot less oil than it used to say it had, and is busy trying to rebuild reserves.
There’s another theory doing the rounds, however. Is Shell tidying itself up, sorting out its shareholdings (remember the Dutch and British boards were united, only recently) in an attempt to make itself look attractive in the mergers and acquisitions market. Some speculate that Shell is in fact preparing for the day it can walk down the aisle with BP, with the two merged companies wallowing in oil sands and renewable forms of energy, as if it were confetti.
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