* CEO says technology could trump pipeline expansion
* In talks on potential investments
* AimCo scored 10 percent return in 2012
By Jeffrey Jones
CALGARY, Alberta, Jan 17 Pipeline expansions may
not be the only way to narrow a deep discount on Canadian oil,
and the head of Alberta's public sector pension fund has been
approached with some technological ideas that could eventually
Leo de Bever, chief executive of Alberta Investment
Management Corp, said on Thursday that shipping the western
province's bitumen to faraway markets like the southern United
States might not be the only or best way to get the highest
value for the vast supplies.
Finding ways to use less energy to produce or ship
tar-sands-derived crude might bring longer-term rewards, said de
Bever, whose agency manages C$70 billion ($71 billion) in
assets. AimCo has not traditionally invested in oil
"A number of people have approached us on the following kind
of model: 'We've got these deposits, we've got this technology
to exploit them - I'd like to use the deposits as collateral for
the technology.' That would work for us," he said in a meeting
"So there are a number of proposals that are at various
stages of discussion where that's the case."
Oil producers and the Alberta government have been hit hard
by a discount on Canadian heavy crude oil that has deepened at
times to more than $41 a barrel compared with U.S. benchmark
crude over the last two months. That means Canadian crude is
worth less than half as much as international Brent oil.
The main reasons cited include tight capacity to move the
supplies to U.S. markets and regulatory wrangling that has
delayed new projects, such as TransCanada Corp's
Keystone XL pipeline to Texas.
The Conservative government of Alberta Premier Alison
Redford has already warned that the low prices could force it to
miss its goal of balancing its books this year. Cost cutting is
expected in an upcoming budget.
De Bever said it is worth considering whether lower
production might make more sense as prices languish.
"My point is simply that you've got resources in Alberta.
They have a value and the value differs very much with the
technology that you have available to you to exploit it," de
Bever said. "Who says that shipping it to Louisiana or Oklahoma
is the most efficient and the most valuable way in the long run
of making use of this resource?"
The situation, along with surging light oil production from
North Dakota, has also spawned a boom in oil rail transport,
allowing crude to be shipped to more locations.
De Bever said one possibility was to turn the bitumen into a
solid substance, rather than liquefying it, and ship it in
Other technology could cut the amount of energy needed to
produce the heavy crude and reduce overall costs, he said.
Under de Bever, AimCo has concentrated its investments in
the fields of food, energy and materials. But he has added
"enabling technologies" in a host of fields to the mix, he said.
AimCo manages public sector pensions as well as Alberta
government funds such as the Heritage Savings Trust Fund and
Sustainability Fund. It had an overall return of about 10
percent in 2012, which would be its second-best-ever showing, de
He sought to cool any expectations that there will be
similar results this year, with stocks likely to outperform
"Going forward, things get more and more dicey for bonds. I
only see two scenarios there: a bad one and a really bad one,"
Meanwhile, AimCo is still seeing investment opportunities in
public infrastructure, especially in the United States, as banks
exit some of those businesses, he said.