The Future of Alberta’s Oil Sands

US Embassy Canada at Oil Sands Facility

For years, the tar sands, otherwise known as the tar sands, of Canada have been a huge source of North America’s – and the world’s – oil supplies.

Tar sands are basically large areas of loose sand that contain large amounts of extremely viscous petroleum. The particular kind of petroleum is known around the world as bitumen. Because the oil, when extracted from the sands, is very dense with a consistency almost like cold molasses, an extensive heating process is required to make it into useable fuel.

Though many other countries around the world, Russia in particular, have tar sand deposits, Canada is by far the leading producer. The majority of the country’s deposits are located in northern Alberta. It is proven that they hold at least 1.75 trillion barrels of bitumen. The recoverable amount of this oil, which with current technology is about 173 billion barrels, is estimated to amount to nearly 75% of the total North American petroleum reserves.

It’s the source of a lot of usable oil and usable energy, and also a growing source of controversy.

An MIT report stated the oil sands to be no longer economically viable, while another study countered that Canada’s oils sands cost less to produce on average than US tight oil. What’s not up for debate is that the extraction and production method for tar sands create three times more greenhouse gas emissions than regular oil production methods and is the cause of incredible environmental damage.

Another threat to the future of Canada’s tar sands is cost. Rising labor costs are at the forefront of the problem as are increases in the operating cost of the machinery used to extract the bitumen. To top this all off, oil production in other countries, in particular the United States with the current fracking boom, has continued to exceed expectations and is preferable to the tar sands oil.

The shining light for the economic viability of the tar sands in Canada are the current operations. It has been shown that currently operating tar sand mines and refineries can continue producing and selling oil at reasonable prices. It is new operations, with all of the initial upstart costs, that are unlikely to gain traction.

At the end of the day, it looks like things will continue as business as usual for the Canadian tar sands mining operations. New operations, however, are unlikely to appear anytime soon, unless more cost effective and environmentally friendly extraction and refining methods are perfected.

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