According to Jeff Rubin, Chief Strategist and Chief Economist at CIBC World Markets, Canada's oil sands may be the final frontier for investors intent on profiting from depleting conventional crude reserves. It is estimated that with the Middle East and even Russia increasingly off-limits, that the oil sands and Canada's other deposits represent 56 percent of the world's investable reserves.
Conventional oil capacity dropped in 2005 for the first time in history and will continue to decline for the foreseeable future despite soaring crude prices. The projected three million barrel-a-day increase in world production between now and 2010, will come from non-conventional sources. Canadian oil sands will be accounting for a larger share of incremental production growth after 2009.
The report states that Canada now has the potential to become a major global producer by 2010 with some 174 billion barrels of oil sands reserves. The current two million barrels a per day of Canada's conventional oil production, didn't qualify Canada as anything more than a secondary oil producer.
According to Rubin, it remains to be seen whether Canadian production can grow that quickly. The cost and time consumption are usually doubled as originally planned to bring on new oil sands supply. However, the cost story for non-conventional energy worldwide is the same, and are certainly not unique to Canadian oil sands projects. Depleting conventional supply, higher cost and time delays simply equate to higher crude prices.
The politically instability in other key rich oil regions, also makes Canada increasingly attractive as an oil producer and carries a huge safety premium for investment purposes. All these factors add tremendous value to the 3.745% working interest in the Itiyok 1-27 Well in the Beaufort Sea in Canada, Apex purchased in 1997.
Apex signed operating agreements with, among others, Chevron Canada Resources, ExxonMobil Canada Properties and Canadian Forest Oil Ltd.
The partners in the Itiyok 1-27 Well are as follows: IMPERIAL OIL RESOURCES VENTURES 58.67312% DEVON ARL CORPORATION 14.72% PETRO CANADA 14.20% APEX RESOURCES GROUP INC. 3.745% CONNOCOPHILLIPS CANADA RESOURCES CORP. 3.003% CANALANDS RESOURCES 2.255734% CANADIAN NATURAL RESOURCES LIMITED 1.23445% CANADIAN FOREST OIL LTD. 1.084348% 677862 ALBERTA LTD 1.084348%
The Itiyok 1-27 Well was originally drilled in 1983, at a total cost of CAD$85 million. A review of Well data and geological prognosis indicates that a 640 acre area would contain proven recoverable gas reserves of 108 Bscf and proven recoverable oil reserves of 8,976 MSTB, with Apex Resources Group Inc. 3,745 % working interest net reserves of 4.04 Bscf and 336 MSTB.
Seismic data indicate a structure closure of approximately 40 square KM with a gross potential reserve of 1.16 TCF and 160 MMSTB (Apex 3.745 % working interest net -- 34 Bscf and 4.7 MMSTB). The lands in which the Apex Resources Group Inc. owns an interest comprise of 21.54 square KM containing gross potential reserves of 625 Bscf of gas and 86 MMSTB of oil Apex 3.745 % working interest net -- 23.4 Bscf of gas and 3.2 MMSTB of oil). Values of proven, probable and possible gas and oil reserves, of Apex 3.745 % working interests, as per Citadel Engineering report, have been published in previous news releases.
The progress of the pending construction, of both the Mackenzie Valley Gas pipeline & the Alaska Gas pipeline, is significant for the producing of the Itiyok 1-27 Well in the Beaufort Sea in Canada.
The fact that Canada is positioning to become the planet's single largest new oil source by 2010, together with the North American need for new gas supplies continuing to increase, intensifying the necessity to complete the pipelines. This adds significant value to Apex Resources Group Inc. 3.745% working interest in the Itiyok 1-27 Well.
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