How to Invest in Canadian Oil

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Much of the geologic formation underlying Alberta, Canada contains lucrative oil sands.
Much of the geologic formation underlying Alberta, Canada contains lucrative oil sands. (Image: Autumn image by Ryian from Fotolia.com)

Canada produces 3.35 million barrels of oil per day (bbl/d), ninety-nine percent of which is exported to the United States. Newly-developed oil supplies, efficient production techniques and more pipeline infrastructure will increase Canada's ability to meet U.S. demand, making Canadian oil an ideal investment opportunity. Canadian oil companies positioned for short and long-term growth include oil and gas service companies that specialize in oil sands production, pipeline construction outfits crossing into the U.S. and locational advantageous refineries.

Things You'll Need

  • Finances
  • Stock broker

Investing in Canadian Oil

Invest in oil companies that have a stake in Alberta's oil sands. Overall, Canada can produce an estimated 178.6 billion barrels of crude, second only to Saudi Arabia, but a lot closer to the United States. Alberta's oil sand fields have an estimated 174 billion barrels of proven reserves. The largest field is Athabasca. Publicly-traded companies that have vested stakes in Canada's oil sands include Imperial Oil (which pays a stock dividend) and Suncor Energy.

Invest in pipeline infrastructure that transports oil sands to refineries in the United States. Proximity to a hungry market makes Canadian oil very appealing. Transporting oil across the border is less expensive than the costs of ocean tankers moving oil across the globe. New pipelines or extensions are planned for areas linking Canadian oil to refineries and markets in Illinois and Oklahoma. Companies of interest include TransCanada and Endbridge, Inc. (the latter pays a stock dividend).

Invest in refineries with advantageous locations along Canadian coasts and near the Midwest of the United States. Without new pipeline extensions, oil imports for coastal areas are cost-effective, as it's less expensive to refine locally-supplied oil. Refineries in position include the Conoco Phillips' Wood River Refinery.

Oil refineries will benefit from new pipeline construction, bringing oil sands closer to market.
Oil refineries will benefit from new pipeline construction, bringing oil sands closer to market. (Image: oil refinery image by Kathy Burns from Fotolia.com)

Invest in specialized service companies that can produce oil sands effectively. Easily accessible oil sands are produced through open pit mining. Deeper deposits require drilling of two parallel but horizontal wells. The upper will injects steam (burdening water supplies), heating the sands, which lowers its viscosity to the point where it naturally flows to the lower well and is pumped to the surface. The condensation process also produces a lot of waste water. Companies working in the oil sands field include Marathon Oil Company (which also pays a stock dividend).

Diversify your energy investment dollars by also investing in natural gas or nuclear energy companies in other regions. With increased energy demand or inflation, diversified energy investments will be a potential hedge for your investment dollars. Choosing companies that pay dividends will also provide continued value to your investment dollars.

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