What is 'Oil Sands'

Oil sands, or tar sands, are sand and rock material which contains crude bitumen, a dense, viscous form of crude oil. Bitumen is too thick to flow on its own, so extraction methods are necessary. Oil sands are found primarily in the Athabasca, Cold Lake and Peace River regions of northern Alberta and Saskatchewan, Canada, and in areas of Venezuela, Kazakhstan, and Russia. Bitumen is extracted and processed using two methods, mining and in situ.

Oil sands trade as part of the crude oil commodities.

BREAKING DOWN 'Oil Sands'

Oils sands produce significant revenue for Canada, but not without considerable expense and risk, as well as damage to the environment. The Alberta government estimates that there are 1.7 to 2.5 trillion barrels of oil trapped in the oil sands. However, 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 which uses oil rigs for extraction. Intensive mining, extraction and upgrading processes mean that oil from oil sands typically costs several times more revenue to produce than using conventional methods.

In surface mining oil sands, clearing large land areas of trees and brush is the first step. The topsoil 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 percent of actual bitumen. After processing and upgrading, the result travels to refineries, for refining into gasoline, jet fuel, and other petroleum products.

Another method of mining is the in-situ also called in-situ recovery (ISR) or solution mining. It is mainly used to extract bitumen in oil sand that is buried too deep below the earth's surface for recovery with a truck and shovel. In situ technology injects steam and chemicals deep beneath the ground 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 surface mining method.

Costs of Extracting Oil From Oil Sands

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 after completing operations, adding further to costs.

The in situ method is more costly than the surface mining method, but it is much less damaging to the environment, requiring only a few hundred meters of land and a nearby water source to operate. After drilling holes, a mining solution is pumped into the soil. At times explosions or hydraulic fracturing may be utilized to open pathways.

It is estimated by the Alberta government that 70-80 percent 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, or SAGD.

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