The Largest Oil Reserve You've Never Heard Of

Canada's province of Alberta is perhaps best known for its cold weather and its hockey teams. But it also has a huge deposit of oil sand.

So what exactly is “Oil Sand”. Oil Sand is a mixture of sand, water and clay that contain bitumen. Bitumen is a very thick substance that needs to be separated from the sand before it can be used to make oil. The process of making oil from oil sands is time consuming and expensive, but thanks to the recent large rise in oil prices, it is now commercially viable. It is the second largest oil reserve on earth (larger than Iran and Iraq, but smaller than Saudi Arabia).

Imagine, a huge deposit of oil that is NOT in the Middle East! It sounds too good to be true. Some people feel that it IS too good to be true. First off, Oil Sands are mined and trucked to a processing plant that separates the sand from the bitumen. The bitumen then must be heated and diluted with lighter hydrocarbons before it becomes usable oil. This process is expensive and it takes the energy equivalent of 0.7 barrels of oil to produce one barrel of oil from oil sands. There is also a problem with getting the huge amounts of water needed to separate the bitumen from the sand. Last but not least is the labor problem associated with processing oil sands. The mines are well north of Edmonton and not many people want to work there. To get the labor needed, companies are paying a huge premium for help. Even people working in coffee shops near the mines are getting signing bonuses!

You would think that, given the good relations between Canada and the United States, this oil would be flowing to the U. S. and we would be cutting back on buying oil from the Middle East. You would think this, but you would be wrong. Environmental laws in the U. S. prevent us from using this oil, so consumers continue to pay more for oil that goes to support terrorism and tinhorn dictators like Hugo Chavez.