Canada is in the middle of a quiet oil boom

Ft. McMurray, Alberta - With oil prices hovering near a hundred dollars a barrel, there’s a major oil boom underway. It’s not happening in the sweltering heat of Texas or the dry desert of Saudi Arabia, but on the frozen Canadian tundra where oil producers are developing a new source of fossil fuel. 

It may seem like unlikely terrain for one of the biggest oil booms in recent memory. But Canada’s “oil sands” have helped make it the leading supplier to the United States. 

Here in Alberta — a once-desolate outpost 800 miles north of the U.S. border that has gone from ghost town to boom town — you won't see any spouting geysers, or traditional pumps drilling for oil deep underground.

The oil — trapped in dark sticky sand — sits just below the surface of the earth waiting to be mined. Brad Bellows, a spokesman for oil company Suncor, explained that first step is to claw the oil mixed with sand out of the earth, using some monster machines.

“(We use) the biggest trucks in the world. These are the biggest shovels in the world,” he said. “You can smell the oil even in the winter when it's frozen.”

There's more oil up here in the Canadian sub-Arctic than in all of Saudi Arabia. These tar sands stretch on for about 50,000 square miles. 

Oil companies have known about this region for more than half a century. But it wasn't until recently that it was worth getting the oil out of this desolate landscape. That's because the operations that take place in these Alberta tar sand mines are complicated and expensive, and involve scooping, hauling and processing the oil sand to turn it into actual oil.

It was an investment most companies weren’t willing to make just a few years ago, when the cost of a barrel of oil was a fraction of the price it is today. But Suncor's CEO Rick George saw the potential, and in the early 1990s gambled that investing in oil sands would someday pay off. 

“That was a big bet,” he said. “It doesn't look like a big bet in the rearview mirror, I must admit.  But it was a big bet at the time.”

The company began looking at the idea of producing oil from tar sands as long ago as the late 1990s, when oil prices had fallen to $10 a barrel. The huge deposits have been studied and well-documented for decades, so there’s little risk of not finding oil. But because it’s so much more expensive to produce, betting huge amounts of capital to develop tar sands was a gamble.

But it paid off.  With oil prices hovering around $100 a barrel, Suncor is now worth $45 billion, many times its value just a few years ago. 

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