Canada holds almost 60% of the investable oil reserves in the world today and by the end of the decade Canadian oil sands production will be the planet’s single largest source of new supply, according to CIBC World Markets latest Monthly Indicators report.

“Canada’s oil sands may be the final frontier for investors intent on profiting from depleting conventional crude reserves,” says Jeff Rubin, chief strategist and chief economist at CIBC World Markets. “With the Middle East and even Russia increasingly off-limits, we estimate that the oil sands and Canada’s other deposits represent 56% of the world’s investable reserves.”

The report notes that despite soaring crude prices, conventional oil capacity dropped in 2005 for the first time in history and will continue to decline for the foreseeable future. It also notes that all of the projected three million barrel-a-day increase in world production between now and the end of the decade will come from non-conventional sources – with Canadian oil sands accounting for larger share of incremental production growth after 2009.

Canada’s current two million barrels a per day of conventional oil production never qualified the country as anything more than a secondary oil producer. But with some 174 billion barrels of oil sands reserves, Canada now has the potential to become a major global producer by 2010.

“Whether Canadian production can grow that quickly remains to be seen,” states Mr. Rubin. “It usually costs twice as much and takes twice as long as originally planned to bring on new oil sands supply. But those traits are hardly unique to Canadian oil sands projects – the cost story on non-conventional energy worldwide is the same.

“What investors have to remember is that in a world of depleting conventional supply, higher costs and delays simply equate to higher crude prices.

“What makes the oil sands properties so valuable is that there are few other places where production can grow and even fewer where you can invest.”