Claymore Canadian Oil Sands Sector ETF.
For those not up to speed, the 'oil sands' are huge surface and underground bitumen deposits in Alberta, Canada, that have been developed relatively recently and are still subject to a great deal of expansion.
The exploitation of these resources uses both surface mining, and, increasingly, in-situ development using enhanced oil recovery techniques such as steam assisted gravity drainage. The oil sands are expensive to develop, and as such have only fairly recently started hitting it big as the rising price of oil has exceeded the marginal cost of getting the oil out.
Environmental impact is a considerable concern, particularly for the tailings ponds of the surface mining. This is increasingly a focus of the industry- improving their environmental impact. A couple of the companies are leaders in the in-situ development that's not nearly as damaging.
There are a number of major players, covered in this ETF, as well as a whole host of smaller exploration and development companies. Note that the ETF covers mainly id and large cap companies.
As the cost of oil increases the profit margin of the oil sands will increase proportionately faster than conventional recovery that requires lower prices to be profitable. There's also an abundance of proven reserves.
The risks include a collapse in the price of oil - not a long term factor if you're a PO believer - and the risk of increased costs due to tighter environmental regulation. Under our current conservative government, that's not mu of a concern, and our opposition parties aren't looking good right now. Nor is it likely that th eLiberals would risk hurting the oil sands if they get elected, as this is a key part of our economy out in the west.
Due diligence and all that, but the Canadian energy sector in general, and the oil sands in particular offer a lot of interesting opportunities. This sector makes up a substantial portion of my portfolio right now.