Since the beginning of BP’s crisis in the Gulf of Mexico, US energy sector regulators have been floating increasingly harsh language about offshore drilling leading to increased interest and investment into oil sands (sometimes called tar sands) as an alternative source, especially Canada’s oil sands, where plans are underway to both remediate environmental impacts of the industry as a whole and significantly boost production.

A recent independent study confirms this trend, projecting 2.1M barrels per day (BPD) output by 2012 for Alberta oil sands (a 40% increase from 2009 figures), and as much as 3M BPD by 2020, effectively twice as much as is currently being produced.

This is likely just scratching the surface of total output capacity for the future if major sector players shy away from deepwater drilling and put their exploration dollars into oil sands.

The oil sands in question have enough reserves to meet all of the US’s requirements for at least 25 years, and are the largest single oil deposit on earth outside of the Middle East.

Irrespective of shakeups in the energy sector, and lingering doubts about the future of offshore drilling, oil isn’t going anywhere, and as the cost-effectiveness of exploiting oil sand reserves is increasingly weighed against spills, disasters and the costs of discovering new oil sources, the oil sands begin to look increasingly attractive.

BP itself recognizes this trend, and has decided to maintain interest in a potential $2.5B joint venture with Canadian partner, Husky Oil, possibly joining the already teeming pool of operators like Canadian Natural Resources, Nexen, ExxonMobil, Chevron, ConocoPhillips, Total S.A. and Suncor, which recently moved to address the environmental profile of oil sand recovery.

Committing an estimated $1B over the next two years, Suncor has begun an initiative to clean up the tailings ponds so despised by environmental lobbyists/activists.

Seemingly a large sum, but when checked against the estimated $36-66B price tag for the Gulf disaster BP investors are facing, and future risks of offshore drilling, it amounts to peanuts.

Ultimately it is this risk vs. reward dynamic, which is affecting a change of perspective about the importance of strategic oil sands reserves, that has oil sands becoming increasingly competitive due to advances in technology.