Last Updated March 6, 2007
In June 2006, the U.S. government released its annual International Energy Outlook, which ranked the world's biggest oil reserves by nation. Not surprisingly, four of the top five countries are in the Middle East. Saudi Arabia, Iran, Iraq and Kuwait rank first, third, fourth and fifth, respectively.
In the Number 2 spot? Canada.
Yes, Canada. While not yet a major oil producer, Canada is a potential oil powerhouse, thanks to the black gold contained in the oilsands of Alberta.
- For a more detailed look at Canada's largest source of oil
Alberta's oilsands deposits are the country's largest source of oil, with reserves estimated at between 1.7 trillion and 2.5 trillion barrels. With this enormous reserve, Canada accounts for 13 per cent of the world's total oil reserves.
The development of Alberta oil, especially at the Athabasca oilsands around Fort McMurray, helped the provincial government set income tax at a flat rate of 10 per cent, eliminate a $22.7-billion debt in less than a decade and post a projected $7 billion surplus in 2007.
Found in the Athabasca, Peace River and Cold Lake regions of Northern Alberta, the oil is trapped in a mixture of sand, water and clay.
The actions of water and bacteria have transformed the light crude into bitumen, a much heavier, carbon-rich and extremely viscous oil.
The oilsands near the surface are extracted through open pit mining, mainly with shovels and trucks.
But about 80 per cent of oilsands cannot be pulled out that way. Oil must be extracted using in situ (Latin for "in place") technology.
Extracting the oil
Two parallel wells are drilled about five metres apart. Steam is injected through the top well, heating the oilsands and thinning the bitumen. The hot bitumen migrates towards the producing well, bringing it to the surface, while leaving the sand in place.
The process is not cheap, but with oil prices above $55 US a barrel, more and more producers are expanding into the oilsands.
Suncor's March 2005 application to expand its Alberta oilsands operation follows the approval of Canadian Natural Resources' Horizon project and Petro-Canada's investment in the Fort Hills project.
According to Statistics Canada, the oilsands industry, buoyed by high energy prices, will be the largest contributor to growth in the mining, and oil and gas sectors. Existing and announced investments, which now total over $50 billion US, are expected to triple current production by 2020.
This expected increase in oilsands investment comes despite rising capital costs, labour shortages and the rising price of meeting Canada's Kyoto Protocol commitments.
In fact, environmentalists worry that clean-burning gas from the Mackenzie Gas Project will be diverted to refine the dirty oil of Alberta's oilsands.
They say this will increase Canada's greenhouse gas emissions at a time when Ottawa is supposed to be cutting them. Production from the Alberta oilsands is set to quadruple in the next 25 years, and producers will use natural gas for refining.