Where there is muck there is brass and, it seems, nowhere is this more true than in the oil sands of Canada: Jeroen van der Veer, Shell’s boss, is rolling in the primeval glop that is the bitumen deposits of northern Alberta.

Shell has always been shy of revealing too much about the dirty business of mining oil sands and upgrading the bitumen into synthetic crude. It is a massive, high-cost operation but for those interested in probing, some figures are available. Shell earns more money from a barrel of oil sands bitumen than from its wells in the North Sea, Nigeria, Arabia or the Gulf of Mexico.

The reason is a coincidence of higher oil prices and low taxes. When oil was just $18 per barrel at the beginning of the decade, the Alberta mines were a Cinderella business, ignored by the other majors. But Shell plugged away, chiselling at the high costs until it had something that could break even on a good day.

In financial terms, this looks set to be a godsend for Shell. As the group struggles to find conventional oil, Shell is preparing to begin to publish oil sands profits in an effort to shift attention from output to earnings. At oil prices of $60 or more, Shell gets a margin of more than $20 per barrel, courtesy of the fiscal policy operated by the province of Alberta, a policy that has earned it spectacular wealth.

However, the massive bitumen reserve –Alberta boasts a resource on the scale of Saudi Arabia – is a store of problems for the future.

Shell’s bitumen-based synthetic crude, is a clean, low-sulphur oil highly prized by refiners. But production is energy-intensive and therefore carbon-intensive. Valuable reserves of natural gas, a low-carbon fuel, are currently being burned to produce steam to loosen bitumen from sand.

It makes little sense unless you are an American motorist in need of cheap petrol or a US Congressman enraged about America’s dependence on Arab oil.

Late last week, some US pension funds wrote a letter to Shell and others, demanding information about the Dutch company’s plans to invest in Iran. Shell is tinkering with a project to develop a massive resource, the world’s largest known gasfield. The US funds are worried about Shell’s potential link to a regime designated by Washington as “a state sponsor of terrorism”. Mr van der Veer said yesterday: “It is not Shell that decides which energy should be produced. Governments decide.” The same logic should apply to oil sands.

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