There's no reason for investors to be spooked by massive cost overruns at many big Alberta oilsands operations since robust oil prices will likely keep the sector chugging along for decades to come, junior oilpatch players say.

"When you have $95 oil, it really outweighs the majority of the costs that have increased over time," said Jason Gigliotti of Habanero Resources Inc. (TSXV:HAO), a junior oilsands producer.

"Going forward (Alberta) is still the only viable place that's growing in production ... This is where the money's going to go. Logically (the sector) is only going to increase for the next 40 years, not decrease."

Gigliotti's optimism flies in the face of recent warnings that the business of pulling bitumen out of the ground is only going to get more and more expensive.

File photo by Larry MacDougal, Business Edge
Dumptrucks that can carry loads of 400 tons of oilsands ore work near Fort McMurray.

Last month, Canadian Natural Resources (TSX: CNQ) said its Horizon oilsands project will cost eight to 14 per cent more than its original $6.8-billion estimate - an increase of up to $1 billion.

The 2004 cost estimate for Nexen (TSX:NXY) and Opti Canada's joint Long Lake operation was $3.4 billion, but this past August the companies raised that to $5.8 billion.

A recent National Energy Board report suggests there could be more issues ahead, with oilsands production likely to be 200,000 barrels lower in 2015 than forecast in 2006 as a result of soaring costs.

But while one of the most costly elements of the process - labour - will probably remain tight for the next few years, Shamir Premji of junior company Alberta Oilsands Inc. (TSXV:AOS) believes that problem will ease once megaprojects such as Horizon and Long Lake wrap up, freeing workers to help keep the sector afloat.

His company, like many others, is looking for the most cost-efficient ways to operate oilsands projects with a keen interest in new extraction methods such as the so-called THAI technology of Petrobank Energy and Resources Ltd. (TSX:PBG).

THAI uses air and components of the bitumen itself to heat underground reserves, making the tar-like substance thin enough to flow and is "probably the better way to go," Premji said, adding that the system has a greater recovery rate than the more common steam-assisted gravity drainage (SAGD) systems.

University of Alberta economics professor Andre Plourde said it's important to put the issues facing the oilsands industry into perspective, noting the 200,000-barrel decrease predicted in the report represents only a fraction of total forecast production.

"That's not a huge deal. But I think it's a signal that people are actually looking at this issue seriously," he said.

The best way to alleviate the cost pressures is to allow the market to "discipline itself," he said.

"There will be an automatic cost dampening that occurs when all of a sudden people realize that maybe it's not worth building (oilsands developments) right now."

High costs are just a reality in the oilsands business and there's only so much that can be done to manage them, said Joseph Doucet, a University of Alberta professor who specializes in energy economics.

"We have to recognize that these projects are incredibly large and when you're trying to work with 5,000 skilled workers at a jobsite it really is complicated," he said.

"You can't expect the same level of oversight and efficiency that you have on a project with 20 workers."

And there are some aspects to the cost issue that are simply beyond operators' control.

"A lot of the costs are outside of the scope of the managerial oversight and the ones that are within scope are hard to manage."

He said he expects investment in oilsands projects to taper off from its current high if costs continue to soar, but that may not necessarily be a bad thing for Alberta's economy.

"The pace of growth that we've seen over the last five years in Alberta is not sustainable ... clearly the Alberta economy is feeling the impact of that level of investment in terms of inflation, labour markets, increased housing costs, stresses on infrastructure and so on."