The world is waking to Canada's potential to vastly increase its production of heavy oil and oil from oil sands: former Saudi oil minister Sheik Zaki Ahmed Yamani warns that increasing heavy-oil output from Alberta will some day compete with OPEC's Middle Eastern production. The former minister made the comments at the annual Canadian Energy Research Institute conference in Calgary. But the status may not come smoothly, as Canada's producers of heavy oil and oil from oil sands faced an unexpectedly tough time last year. Results were mixed. For example, there was a sharp decline in heavy-oil demand in August and September following an explosion at a Citgo refinery near Chicago. FirstEnergy Capital Corp. of Calgary now expects conventional heavy-oil production to decline by 30,000 barrels per day this year as the differentials between light and heavy crude have widened and the general price of oil has fallen. (See "Alberta's Heavy Oils," Oil and Gas Investor, October 2001.) Meanwhile, Syncrude Canada Ltd. closed out 2001 by setting its 19th production record in 23 years at its heavy-oil mines north of Fort McMurray, Alberta. During the year Syncrude shipped 81.4 million barrels of syncrude sweet, which represents a rate of 223,000 barrels per day, about 10% more than the prior year. The operating cost per barrel averaged C$18.47, somewhat higher than expected. Syncrude cited plant maintenance work performed during the year and the higher cost of purchased gas in the first half. -Leslie Haines

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