http://www.canada.com/vancouversun/n...

MADRID -- Canada's oilsands are still years away from making a meaningful impact on global oil supplies, the heads of two of the world's largest oil companies -- Exxon and Total -- said at the World Petroleum Congress in Spain Tuesday.

But they also said despite economic and environmental challenges, unconventional oil from Canada will eventually play a crucial role in meeting the world's oil needs.

"Resources in Athabasca [Alta.] are huge, probably much bigger than expected," Total CEO Christophe de Margerie told a news conference. "The problem is that the time to take resources into production will be longer than expected."

"Today they are relatively small in the global sense, but they are very important to North American energy-supply security, and they can become even more important in the future. I think oilsands will take their role in the future in terms of importance of supply to North America."

Both Total and Exxon are fast-growing oilsands players in northeast Alberta. Total is awaiting regulatory hearings for its Joslyn project while Exxon, through its 70 per cent interest in Imperial Oil, is moving ahead with the Kearl oilsands mine.

Imperial is also the second-largest interest holder in Syncrude Canada and operates the Cold Lake thermal project.

Tillerson noted many obstacles presently exist to oilsands development, including intensive use of natural gas in the extraction process along with elevated greenhouse-gas emissions compared to conventional oil.

"It is very high cost, but technology advancements will continue to be made to improve the economic performance of the oilsands resource in the future. There are enormous challenges, both in terms of their energy intensity and therefore the greenhouse-gas emissions that result."

Environmental concerns also plague development of the massive resource. In an editorial headlined "Oilsands industry in a fowl mess," the daily WPC newsletter distributed at the conference lambasted the oilsands as a "messy, costly business," that the world is struggling to take seriously in light of the deaths of 500 ducks.

The article, penned by the London-based Petroleum Economist, described the oilsands as a "frequent target for scorn as an overrated and over-priced mining venture, despite 40 years of commercial production and an estimated 173 billion barrels of recoverable crude."

Speaking at a reception hosted by the Canadian embassy on Monday night, Alberta Energy Minister Mel Knight defended the record of oilsands development and said the province remains committed to working out the environmental issues.

"We have not, we are not, and we will not put our environment at risk for money," he said.

Despite the setbacks, both Exxon and Total were optimistic for the potential contribution of oilsands to the global supply picture. Tillerson had kind words for the Canadian government, which he commended for supporting oilsands development. In their WPC presentations, both CEOs complained that the restrictive investment policies of national oil companies that make up OPEC's membership have precluded them from developing lower-cost oil supplies.

About 90 per cent of the world's oil reserves are located in countries that limit foreign investment in energy. The remaining 10 per cent is the subject of increasing scrutiny after the International Energy Agency on Tuesday released its non-OPEC supply forecast, which analyst Lawrence Eagles described as "paltry to say the least."

Of all non-cartel countries surveyed, the Paris-based think tank said Canada is expected to lead the pack will an additional 1.2 million barrels by 2013, followed closely by Brazil. Although the report noted that demand is expected to fall in the same period, overall production is also expected to decline at an even greater rate. "We are clearly in the third oil shock," said Nobuo Tanaka, the group's executive director.

While acknowledging the environmental and economic barriers to oilsands development, de Margerie speculated on the use of nuclear power to displace natural gas and reduce emissions from oilsands.