Accelerated development of the oilsands in northern Alberta is unlikely, even with all the extra cash flowing to the energy sector in the wake of current record-shattering oil prices, says a Canadian oilpatch leader.

Charlie Fischer, president and chief executive of Nexen Inc., said the oilsands simply cannot be developed any faster than they already are. The vast oilsands of northern Alberta contain billions of barrels of heavy, tarry oil and are said to be the second-largest energy reserves in the world behind Saudi Arabia.

However, developing such resources can cost billions of dollars and involves huge open-pit mining projects, giant trucks and other heavy equipment, a need for skilled workers and a network of pipelines and specialized refineries.

“On projects like oilsands, there’s a fixed capacity to build these things,” Fischer told The Canadian Press.

File photo by Dave Lazarowych, Business Edge
Nexen president and CEO Charlie Fischer is angling to be a major oilsands player by 2007.

“We don’t have an infinite supply of skilled labour. We don’t have an infinite supply of engineering talent to design these things, and so you can only do so many of projects at any given point in time,” he said.

“So I think you will see a very steady progression of these projects, but I don’t think that they’re going to be accelerated because of the physical limitations associated with actually designing and building them.”

Nexen (TSX:NXY) is just one of a long list of energy companies preparing to build new mines and plants in northeastern Alberta, where bitumen is squeezed or boiled out of the sands and converted into synthetic crude.

Through its half stake in the planned $3.4- billion Long Lake project, Nexen hopes to be a major oilsands producer by 2007.

A report from the economic think-tank C.D. Howe Institute urged Canada to “mount a vigorous response” to increase energy supply, including more oilsands development, as oil prices continue to rise.

But energy analyst Tom Ebbern with Tristone Capital in Calgary said bigger projects like oilsands developments will not be immediately impacted by higher energy prices.

“The near-term beneficiaries are going to be shallow gas, coalbed methane and in-fill drilling. Higher prices means you can now afford to drill tighter spacing,” Ebbern said.