Bill...

The vast majority of the new production utilizes the drilling of two parallel horizontal boreholes. The upper borehole injects steam into the formation while the lower borehole receives the oil.

I was just at Suncor a couple of weeks ago and their project utilizing this process, SAGD (steam assisted gravity drainage), is named Firebag.

Bill,

I'm wondering if there is any substance to Ivanhoe Energy's claim that they have developed a process to upgrade heavy oil using steam generated from bio-mass technology, in turn developed by their recent Ensign Pete acquisition. Are there readers that can weigh in on this?

Bill - Would you happen to know which company(s) might be carrying the oil to market? Also, might there be a Trust(s)set up in Canada that would benefit from this increasing delivery of oil sand product?

Thanks.

TerryC - Here is some further info and a link to more.

"...Contained in the oil sands are vast quantities of so-called bitumen, or super-heavy oil, underneath an area of northern Alberta as big as Florida. One extraction process is similar to strip mining, in which sand is scooped out and cooked at high heat to extract the sludge. Another process pumps steam into the underground deposits, dissolving the bitumen and allowing it to be piped to the surface. Under both methods, the resulting goo is refined into commercial grades of crude oil and piped to customers, mostly in the western United States. About 2 tons of sand have to be dug up, heated and processed to make a single 42-gallon barrel of oil.

The crucial ingredient in this process is natural gas. Although other fuels have been used to cook the oil sands, such as coal and the bitumen itself, none works as well as gas. Production of gas from long-established fields in Alberta is expected to decline in coming years, and because demand for gas is rising fast, expansion of the oil sands will require new supplies.

The nearest major source is in three well-explored yet untapped gas fields in the delta of the Mackenzie River on the shore of the Arctic Ocean. If the pipeline is built, gas from the delta can be funneled down to Alberta, where it will connect with the province's pipeline system to reach the oil sands...."

http://www.energybulletin.net/4942.html

Re Encana (ECA)
--------------------
I wonder what can be said about Encana going forward as they are one of the main NG producers along with CHK. The price of NG fluctuates between $8.20-$9.00 and with warmer seasonal temperatures it is unknown where this price may end for 2006.

While playing ECA, there is a very minute Geo-Political premium, however there tends to be a massive disaster premium such as Hurricane premia.

Last week ECA had mentioned it is willing to sell up to 50% of its Oil Sands or cede control or 50% in order to team up with 1-3 refiners. I am unsure what ECA plans through such a move but they seem to want to be able to expand its refining capacity and perhaps have a small diversifier from a plain NG play. Perhaps the hedging from ECA has left a sour taste for investors to digest. Ignoring the dollar figure they have hedged at what we do know is as NG rises ECA loses money. To what extent this hedge may be lifted and the speed at which it may be reversed is unknown given the data I have.

I can say that it is probably a wise decision to give up some of its Oil Sand control in exchange for refining as getting a refiner to work with you is very difficult due to the shortage of new refiners in the market and capacity issues.

ECA is a stock I see stuck in a trading range until the weather patterns change drastically to offer below-average temperatures or until it can benefit from what I call "Hurricane Premia".

ECA is watched on a daily basis and presently strong support can be seen at the $42.50 USD range with significant resistance at $50.25

Presently, I'd be playing the Oil and exploration groups. Oil's trading on geo-poltics and fear and the Drillers and Exploration Groups trade in-line with Oil. I wouldn't be a buyer of ECA if Suncor is available on a pullback. Suncor's fire is long behind them and production should be near capacity.

/d

dinov-

Very good thoughts there. Thanks. What is clear is that the market is not treating ECA like its brethren. It is lagging.

Would your preference be to see more of a pullback in both those groups (oil and explorers) before going long? They have had a nice run up but are beginning to pull back with oil retreating.