On Friday I was at the Stanford Institute for Economic Policy Research’s Economic Summit (some videos available), where among other things I learned that the oil sands of Canada are, unfortunately, more accurately thought of as “tar sands”. But Chevron has announced a $60 million deal to develop these sands. The Motley Fool’s Jack Uldrich speculates on why they are willing to take this big project on:
“The risky venture could ultimately cost tens of billions of dollars and take up to a decade to develop, since the tar in the oil sands isn’t easily converted to usable oil. But Chevron may have a very tiny ace up its sleeve, thanks to its involvement with nanotechnology…
“Chevron’s work in creating new nanoparticles offers the greatest promise. If the company can produce new nanoparticles with unique catalytic capabilities, it may be able to more effectively and efficiently refine the thick, gooey tar-sands into highly refined — and profitable –oil.
“Headwaters (NYSE: HW) is already developing nanocatalysts to convert heavy oils into higher-yield oils, and I have reason to believe that Chevron is doing the same. If the company succeeds, these powerful new nanocatalysts could make extracting oil from the tar sands profitable, even at prices lower than $35 a barrel. And if oil prices stay high, a cheaper extraction process will only bolster Chevron’s profit margins. It’s yet another small solution to a potentially big risk.”