By Duncan Sutherland – Exclusive to Heavy Oil Investing News

Hello to everyone out there. Sorry that Upgrader is later than usual this week. I have been in Winnipeg and Northern Ontario on a semi-vacation.

On that note, it was helpful to be without news for a few days as it offered perspective on what investors found interesting. As always, if there is something you want to see more of, leave a comment here, or email me at dsutherland@digmediasolutions.com.

But this week, what looked like the headline story for heavy oil and oil sands was the trip by Bill Gates and Warren Buffett to examine the Albertan oil sands. Largely on that information, the resource-heavy TSX composite index was up 2.19 per cent by 286.29 points to 13,350.14. Not surprisingly, this was driven primarily by energy firms.

Messrs. Gates and Buffett were examining the operations of Canadian Natural’s (TSX:CNQ) Horizon project, among a couple others. Though the two men have yet to announce any financial plays in Alberta’s oil industry, Fort McMurray is not famous as a vacation spot for multi-billionaires. Upgrader will be following this story as it develops.

The timing of the billionaire boys’ club visit upstaged the news that a mutant fish had been caught in Lake Athabasca, downriver from the oil sands projects. The two-mouth fish may not have mutated due to oil sands pollution, but it highlights concerns over high cancer rates in downriver communities like Fort Chipewyan. The environmental damage that oil sands production causes remains the largest potential liability for the industry.

Company news:

Great Valley Production Services, a subsidiary of Tri-Valley Corporation (AMEX:TIV) secured US$5 million of funding in order to expand oil and gas projects on its six California properties. The money was acquired through equity sales in GVPS by Tri-Valley, and is predominantly expected to fund the acquisition of more production equipment.

Indeed, oil and gas companies worldwide are facing a seller’s market for almost all the necessary equipment, from drill bits to refinery kits. With just about every manufacturer producing as fast as possible, many projects are still being delayed due to insufficient parts. This side of the energy sector is often overlooked, but can be just as lucrative as the actual production. Companies like Hyundai Heavy Industries (SEO:009540) and similars (like Samsung Heavy Industries, Daewoo Shipbuilding, and STX Shipbuilding) have all made good returns on the increased demand for oil and gas tankers, offshore rig building and port facilities.

Negotiations are continuing between Ivanhoe Energy (TSX:IE) and state-owned PetroEcuador. Ivanhoe’s gambit is obvious: The company has a successful on-site processing technology it uses in Alberta, but most of the obvious Alberta properties are already owned. Thus, a capital-intensive heavy-oil project in Ecuador’s underdeveloped Pangarayacu field would offer much larger growth potential. The Globe and Mail are reporting that production could peak at 120,000 bpd. Ivanhoe is playing a high-risk, high-reward game in Ecuador, but the lack of other serious investors in the country’s oilfields positions only benefits Ivanhoe. Though President Rafael Correa is less combative and mercurial than Hugo Chavez of Venezuela, he is similarly sceptical of neoliberal economics, free trade and publicly traded oil companies.

Chevron (NYSE:CVX) concluded a deal with the provincial government in Newfoundland on development of the Hebron offshore oil field. The province will own 4.9 per cent equity in the project, expected to generate some C$16 billion over the quarter-century lifespan. Significantly, the structure of the contract calls for provincial royalties to “float” according to oil prices. Expect the project to begin in late 2010 to early 2011.

Canadian Phoenix Resources Corp (TSX.V:CPH) has been busy lately, acquiring 50.1per cent of Serrano Energy’s common shares. Over three different transactions, the deal greatly improved Canadian Phoenix’s holdings, but investors did not appear especially interested.

More Upgrader should be onsite by Thursday morning. I hope everyone has a relaxing weekend and good weather.

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