And in an energy market where state-owned firms control a major portion of global daily production, the oil sands deposits provide one of the few remaining growth opportunities for investors, Jeff Rubin, the bank's chief economist, said on Tuesday.
"All of the net increase in oil production this year is expected to come from non-conventional sources," Rubin said in a release.
"While deep-water oil is the primary source today, we forecast that Canadian oil sands will become the single biggest contributor to incremental global supply by 2010."
Canadian oil industry officials say recoverable western Canadian oil sands reserves equal roughly 175 billion barrels - putting it in second place to Saudi Arabia in terms of oil reserves.
Price rise predicted
The Canadian Association of Petroleum Producers predicts that oil sands output from western Canada will account for 75% of the country's total crude oil output, up from a current level of about 40%.
The Toronto-based bank said a study of 164 new oil fields and projects around the world shows that the price of oil will continue to rise over the next three years if global demand does not begin to wane.
As such, Rubin believes oil prices this year will eclipse last year's record high of $70.85 a barrel, reached two major hurricanes in the US Gulf Coast damaged major oil and natural gas infrastructure and for weeks shut in the vast majority of production from that key offshore region.
Recoverable Canadian oil sands
reserves equal 175 billion barrels
Rubin also predicts that oil could surge to a high of $100 US per barrel by 2007, giving energy companies a vast amount of cash in which to invest in large but expensive projects like the oil sands.
While some analysts have projected similar price-spike scenarios, others have dismissed it as exceedingly high.
Onus on producers
But the consensus is that with global demand for oil still strong, as few new discoveries of conventional fields expected, the onus on producers will be to develop unconventional reserves.
"We forecast that Canadian oil sands will become the single biggest contributor to incremental global supply by 2010"
CIBC World Markets
"Not only is depletion significant, but it is also accelerating, forcing more and more reliance on non-conventional sources of supply, such as Canada's vast but largely undeveloped oil sands," said the report.
The CIBC study says once depletion rates are factored in, global conventional supply "seems to have peaked in 2004".
Western Canadian oil sands projects, located in Alberta, are already the focus of massive amount of development, with about $100 billion worth of projects planned over the next two decades.