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Canada oil sands to help meet Bush Mideast oil cut

By Tom Doggett

WASHINGTON (Reuters) - President George W. Bush could get closer to his goal of cutting U.S. dependence on Middle East crude -- but it won't be his futuristic plan to run cars on fuel made from wood chips or hydrogen that will do the trick.

It's Canada.

Bush laid out a plan in his State of the Union speech earlier this week to slash crude imports from the Middle East 75 percent by 2025, replacing the oil with alternative fuels at home.

But yet-to-be released numbers from the U.S. Energy Information Administration, the analytical arm of the Department of Energy, show that crude from Canada's Alberta oil sands will help cut U.S. Mideast oil dependence by half in two decades.

When Bush called for the cut in his speech he was targeting the current forecast of 6 million barrels per day of Mideast oil in 2025, hoping to cut it down to around 1.5 million barrels a day.

New estimates the EIA plans to release later this month predict America's Mideast imports will be 3 million barrels a day in two decades, an EIA official told Reuters.

The new data will show U.S. oil imports from Canada surging to 2.7 million barrels a day in 2025 from 1.6 million barrels currently. About three out of four of those barrels will be from Alberta's oil sands, where record oil prices have created a boom in investment.

There is debate within the agency on whether the United States could take all of Canada's oil sands production, which the EIA estimates will be 3.2 million barrels a day in two decades.

"If (the United States) receives it all, which we don't have in our forecast, it could reduce even more our dependence on the Middle East" oil supply, the EIA official said, speaking on condition of anonymity.

But other countries are interested in Canada's oil sands too, which could stymie the forecasts.

India, which is searching for crude supplies to feed its growing economy, said this week its oil companies would invest $1 billion over the next year to develop Canada's oil sands.

"Asian markets have shown a lot of interest (in Canadian oil sands), the EIA official said. "It's not a slam bang that we'll take it all."

About 95 percent of Canada's estimated 179 billion barrels of proven oil reserves are oil sands deposits in Alberta, according to the EIA.

Oil sands contain deposits of bitumen, a heavy, viscous oil. Once extracted, lighter hydrocarbons must be added to the bitumen so it can flow through pipelines.

Upgraders then process the bitumen into "synthetic crude." In general, it takes about 1.16 barrels of bitumen to make 1 barrel of synthetic crude, the EIA said.

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