What Will the Oil Spill Do For Oil Sands Stocks?

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Bill Paul

Will shares of the oil companies that are major players in Canada’s tar sands region rise or fall?

Logically, shares should rise in the wake of the deepwater drilling moratorium ordered by President Obama following the BP (BP) oil spill, as Wall Street begins to reflect on the fact that Alberta’s tar sands region is the second biggest crude-oil deposit in the world. Even before the spill, a report from IHS CERA had concluded that Canadian tar sands would be the single biggest source of US crude imports in 2010.

Just as logically, however, shares should fall, given that the environmental disaster in the Gulf likely will focus increased political and media attention on the extensive environmental damage caused by tar-sands extraction. It would seem to be just a matter of time before some reporter asks Canadian officials how they feel about the US basically outsourcing the environmental destruction caused by the US’s insatiable thirst for oil.

One Canadian newspaper – the Prince Albert Daily Herald – has already reported that the CEO of oil-sands firm Cenovus Energy (CVE) doesn’t think such a catastrophe could occur in the tar sands region, a conclusion environmentalists no doubt will disagree with.

That BP is as big in Canadian tar sands extraction as it is in Gulf of Mexico oil drilling only adds to the likelihood of an attention-grabbing front-page story in, say, the New York Times.

In addition to Cenovus, several companies’ shares stand to be impacted, among them: EnCana (ECA), Canadian Natural Resources (CNQ), Suncor (SU) and Royal Dutch Shell (RDS.A).

Disclosure: No positions

Disclaimer: This is a news article.  Please read terms and policy.

Bill Paul is Managing Editor of EnergyTechStocks.com.

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