Oil Sands

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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.

INVESTOPEDIA EXPLAINS '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).

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