Wednesday, February 08, 2006

Army reports record enlistments ahead of Operation Alberta Freedom.

Enlistments up 100%, year over year! That's right; me and Jon Markman. (Actually, the list is long and getting longer: Boone Pickens, Peter Thiel, Charlie Maxwell, Jim Rogers, Gary Kaminiski, Jerry Castalini, Martin Whitman.)

msn Money: O Canada, can we have Alberta?


Last month, Canada threw out its namby-pamby liberal government and ushered in a new era of conservative rule. Thank goodness for small favors. Now when we run out of crude oil and natural gas down here in the United States, we won’t have to invade our neighbors to the north to make sure the lights stay on. We can just arrange a friendly annexation.

O Canada! We love your beer, your funny accents, your flag with the botanical theme. Now be a dear and just let us have Alberta. Hey, it’s just one province. You have 12 more. You can keep the ones named after a dog (Labrador) and an SUV (Yukon) and all the rest. We just want the one with those nasty, dirty tar sands. We’ll practically be doing you a favor.

Why the tar sands? It’s not just that it sounds like "Tarzan" after a couple of Molsons. (Funny, eh?) It’s just that, well, we think all that sticky, gooey mess up in the Athabasca region is North America’s answer to Saudi Arabia, as I explained back in mid-2004. And most of North America is already chez nous anyway, as they say in Quebec. So hand it over. Or else.

Stable, with a capital C
You may have heard that President Bush, in his State of the Union address last week, mentioned that the U.S. must slash its dependence on oil from “unstable nations” in favor of cute little science projects like ethanol, nuclear plants and solar panels. But surely you knew that was sort of an inside joke. Most of those projects are a decade away from viability.See the news
that affects your stocks.

What he really meant was that we’d rather strip-mine our BTUs from the perfectly stable Alberta tar pits, which are so close to home that they might as well be ours.

Scientists believe another 315 billion barrels will be recoverable when new technology comes online, which would expand Canada’s conventional oil reserves by a factor of 70x. If that works out as expected, Canada could ultimately produce as much as 25 million barrels of oil per day and leapfrog ahead of Iran, Mexico, China and Norway to become one of the world’s top three energy producers.

Worth taking?
It’s little wonder that Alberta opened up an office of its own in Washington recently, headed by former energy chief Murray Smith. All the easier to negotiate a peaceful surrender.


Victory, without firing a shot
If our play to put the Great White North under the Red White and Blue doesn’t work out -- and maybe it shouldn’t, come to think of it -- we could always just invest in the top tar-sands companies. The top Canadian oil sands pure plays rose more than 200% on average in 2005, and there’s probably still a long ways to go. Companies with a lot of exposure to oil sands will generate tremendous free cash flow for at least 20 years, judging from the current estimates of reserves and rates of production, even if they have to invest another $10 billion or more to get the job done. The projects break even when the world crude-oil benchmark is at $20 per barrel, or one-third the current price.

So if turns out we can’t take 'em, you might as well buy 'em (or pieces of 'em, anyway). This is going to be a long, long secular story: something like investing in Saudi Arabia in the 1940s. But I really do hope the State Department works out a friendly merger with our neighbors on the Athabasca plains one day, if for no other reason than it will give us a chance to shout, “Tar nation!”

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