Earmarked for Whom?
There was another article in the New York Times this weekend citing the tremendous reserves of oil sands in Canada, putting them just behind Saudi Arabia in total oil reserves. (Someone's PR firm is doing a good job, here.) While I still quibble with counting these reserves in the same way as conventional oil reserves, since so much more is required to extract them, there's an even more interesting development suggested in this article in today's Financial Times. A Chinese firm appears interested in purchasing some of these reserves.

Although Canada is hardly the 51st state, I suspect that many of us have assumed that any excess energy production in the Great White North above their local demand will end up down here, as part of the "North American Energy Grid" concept that the Department of Energy has been pushing for the last several years. After all, Canada has been our primary supplier of natural gas imports and an important supplier of crude oil for decades. But as conventional Canadian oil & gas reserves begin to deplete, the high investment costs of extracting the unconventional reserves suggest that they will go to whoever can pony up the cash.

I think there's another unwarranted assumption, concerning the number of facilities that can be built to extract the enormous quantity of hydrocarbons tied up in Canadian oil sands. As the Times article reminds us, oil sands production is energy intensive and emits large quantities of greenhouse gases in the process of making synthetic crude oil, which will emit additional greenhouse gases when it is refined and consumed. Canada is a signatory to the Kyoto Treaty, and at some point Canadians may balk at adding to their emissions pool for the benefit of foreigners, even if the foreigners in question are their neighbors to the south.

So while Canadian oil sands may not exactly be a zero sum game, in which a contract to sell oil to China would displace a comparable volume of sales to the US, they probably aren't an infinite game, either.