Another Sign of Life in the Oil Sands

About a week ago, Imperial Oil signaled that all was not stalled in Canada's oil sands. Yesterday, a fresh face joined the fray.

PetroChina (NYSE:PTR) announced that it's taking a 60% interest in two projects controlled by privately held Athabasca Oil Sands. The price tag? A touch more than $1.7 billion.

This is hardly China's first brush with bitumen. Back in 2005, CNOOC (NYSE:CEO) bought a chunk of MEG Energy, and Sinopec (NYSE:SNP) more recently took a 50% stake in Total's (NYSE:TOT) Northern Lights project. PetroChina itself has tried to secure Canadian heavy crude supply, though it dropped its commitment to Enbridge's (NYSE:ENB) Northern Gateway pipeline project in 2007.

It will be interesting to see whether the Canadian government clears this deal. Like the Unocal flap here in the United States, in which CNOOC was rebuffed and Chevron (NYSE:CVX) kept key assets in domestic hands, Canada may play the protectionist card as well. One fund manager told me he suspects the merger between Suncor Energy (NYSE:SU) and Petro-Canada was motivated by fears of the former slipping into foreign hands.

With Mexican production looking perilous, Canada will likely become an increasingly important source of incremental crude supply for the United States. I wouldn't be surprised if Alberta receives some sharply worded phone calls from area code 202 (Washington).

As for the Chinese, this move follows a series of similar pushes into regions ranging from West Africa to the Middle East. The country is taking energy security matters very seriously and is systematically strengthening its import supply by the day.