Canada's home-ice advantage

Vast reserves are the oil sands' main advantage. Local producers think they can drive costs down where foreign entrants couldn't

Investing in Canada's oil sands has long been a tightrope of enormous returns versus the time value of money. With the world's third-largest oil stash—after Saudi Arabia and Venezuela—the value proposition of some 165bn barrels would seem clear. Yet the size of the prize has long been overshadowed by the combination of huge upfront costs and volatile world oil prices. Billion-dollar overruns on major capital projects are the norm and producers have had to struggle to keep operating costs low enough to be profitable. Major oil companies were willing to overlook those hurdles as long as conventional reserves were declining and they could book hundreds of millions of barrels with virtually no e