Canadian Oil Sands Updates Reserves

Canadian Oil Sands Trust, a lead partner in the world's largest oil sands venture, on Monday raised its estimate of recoverable resources at the Syncrude oil sands project to 12.7 billion barrels, up from a prior estimate of nine billion.

The new estimate could mean higher levels of oil production from the Alberta site, a key source of oil for U.S. refiners and a boon to Canada's economy.

The increase in estimated recoverable resources "reflects the reporting of a new category, known as prospective resources, as well as mine pit design criteria that expand the pit sizes in some areas, consistent with the current business environment," the company said

Proved plus probable reserves were 4.9 billion barrels, largely unchanged from 5 billion barrels at the end of 2006.

"While Syncrude's reserves remain virtually unchanged, the increase to resource base extends the resource life and should result in Syncrude's owners reassessing expansion plans, including a potential of reaching productive capacity beyond the planned 500,000 barrels per day," Canadian Oil Sands CEO Marcel Coutu said in a statement.

It currently has a production capacity of 350,000 barrels of oil per day.

Alberta is home to vast reserves of oil sands, a tar-like bitumen that is extracted using mining techniques. Industry officials estimate the region will yield as much as 175 billion barrels of oil, making Canada second only to Saudi Arabia in crude oil reserves.

Washington is eager to remain a chief market for that oil.

The company said it will continue to better define the resources of its existing leases over the next few years through more drilling and evaluation.

Syncrude, the world's largest oil sands producer, is jointly owned by Canadian Oil Sands Trust, Imperial Oil Ltd., Petro-Canada, ConocoPhillips, Nexen Inc. and others.

Canadian Oil Sands owns a 36.74 per cent working interest in the project.

In January, it reported that fourth quarter profit quadrupled because of higher oil prices and volumes. The trust also announced the increase of its quarterly cash payout by 36 percent.

On Monday, oil prices surged above $108 to a new inflation-adjusted record, while gasoline prices were poised to set a new record at the pump.