Oil Sands

DEFINITION of 'Oil Sands'

Sand and rock material which contains crude bitumen (a heavy, viscous form of crude oil). Oil sands are found primarily in the Athabasca region of northern Alberta, Canada, and in areas of Venezuela. Bitumen is extracted and processed using two methods:

1. Mining - Large areas of land are cleared of trees and brush, then the top soil and clay are removed to expose the oil sand. This surface mining method uses large trucks and shovels to remove the sand, which can have a volume of anywhere from 1-20% of actual bitumen. After processing and upgrading, the end result is sent to refineries, where it's made into gasoline, jet fuel and other petroleum products.

2. In Situ - This relatively new method is mainly used to get bitumen in oil sand that is buried too deep below the earth's surface to be recovered with a truck and shovel. In situ technology injects steam deep beneath the earth to separate the viscous bitumen from the sand and pump it up to the surface. The bitumen then goes through the same upgrading process as it would in the mining method.

BREAKING DOWN 'Oil Sands'

The Alberta government estimates that there are 1.7 to 2.5 trillion barrels of oil trapped in the oil sands, but some industry groups and organizations dispute this claim. The end product from oil sand is very similar to, if not better than, that of conventional oil extraction (using oil rigs). But the intensive mining, extraction and upgrading process means that oil from oil sands typically costs several times more money to produce than conventional methods.

1. The mining method is considered to be very damaging to the environment, as it involves leveling hundreds of square miles of land, trees and wildlife. Oil companies using this method are required to return the area to its original environmental condition once the mining is completed, adding further to costs.

2. The in situ method is more costly than the mining method, but it's much less damaging to the environment, requiring only a few hundred meters of land and a nearby water source to operate. It's estimated by the Alberta government that 70-80% of oil in the oil sands is buried too deep for open pit mining; therefore, in situ methods will likely be the future of extracting oil from oil sands. The most common form of in situ is called Steam Assisted Gravity Drainage (SAGD).

RELATED TERMS
  1. Bitumen

    A substance produced through the distillation of crude oil known ...
  2. Unconventional Oil

    A type of petroleum that is produced or obtained through techniques ...
  3. Oil Reserves

    An estimate of the amount of crude oil located in a particular ...
  4. Steam-Assisted Gravity Drainage ...

    Steam-assisted gravity drainage (SAGD) is a drilling technique ...
  5. Oil Refinery

    An industrial plant that refines crude oil into petroleum products ...
  6. Oil Field

    A tract of land used for extracting petroleum, or crude oil, ...
Related Articles
  1. Markets

    Canadian Oil Sands: Only Lucrative At The Right Price (SU.TO, IMO.TO)

    Canadian oil sands projects are economically viable at oil prices above US$84.99/bbls, and they provide many benefits to the Canadian energy industry.
  2. Markets

    Sand: The Abundant yet Scarce Natural Resource

    Sand, a basic natural resource, is so much in demand that its supply isn’t able to match up.
  3. Markets

    Want To Start Trading Oil? Understand The Basics First

    The overall economics of oil extraction is that there is money in it - both for extraction companies and their investors.
  4. Markets

    The Economics of Oil Extraction

    The overall economics of oil extraction is that there is money in it - both for extraction companies and their investors.
  5. Markets

    Fort McMurray Begins Recovery

    As the threat of wildfire recedes, oil sands production in Northern Alberta is expected to resume shortly with minimal impact on Canadian economy.
  6. Markets

    What Drives Oil Prices?

    Have you ever wondered why oil’s price fluctuates more than the value of other investments?
  7. Markets

    What's The New Emerging Re-fracking Trend?

    The fracking fueled U.S. oil is slowing down. However, this doesn't necessarily spell doom and gloom for frack sand providers like Emerge Energy Services .
  8. Trading

    How Does Crude Oil Affect Gas Prices?

    Find out how this commodity's fluctuating price affects more than just how much you pay at the pump.
  9. Markets

    Is Now the Right Time to Buy Oil Stocks?

    Learn about the oil industry and how crude oil effects the prices of oil stock. Understand if now is a good time to purchase oil stock.
  10. Markets

    Alberta's Oil Sands Production Comes Back Online (RDS-A, SU)

    The wildfire that has ravaged swathes of Alberta continues to burn, but oil producers are already returning to work.
RELATED FAQS
  1. How do the costs of oil sands producers compare to traditional drillers?

    Learn the per barrel breakeven cost of oil sands producers compared to traditional drillers including OPEC and onshore and ... Read Answer >>
  2. Why do oil stock prices drop?

    Doesn't lower oil prices mean more profit for companies that use oil products?  ... Read Answer >>
  3. Why did oil prices drop so much in 2014?

    Learn the roles that decreased global demand, new supply sources in North America and actions taken by Saudi Arabia played ... Read Answer >>
  4. What causes oil prices to fluctuate?

    Discover how OPEC, demand and supply, natural disasters, production costs and political instability are some of the major ... Read Answer >>
  5. What is a heavy oil differential and how does it affect oil producers?

    Learn what the phrase "heavy oil differential" refers to and the significance of heavy oil differentials for oil production ... Read Answer >>
  6. Why are stocks and oil so correlated right now?

    Learn whether the stock market and oil prices will continue their highly correlated price relationship or decouple again ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center