[W]hen Canada announced in 2004 that it has more recoverable oil from tar sands than there is oil in Saudi Arabia, the world yawned. There is estimated to be about as much oil recoverable from the shale rocks in Colorado and other western states as in all the oil fields of OPEC nations. Yes, the cost of getting that oil is still prohibitively expensive, but the combination of today’s high fuel prices and improved extraction techniques means that the break-even point for exploiting it is getting ever closer.
–From “The Oil Bubble,” Wall Street Journal editorial, Oct. 8, 2005

Actually, with oil prices nestled comfortably above $60 per barrel, the oil giants are tapping Canada’s famed tar sands, as this interesting NYT piece by Clifford Krauss shows.

“Deep craters wider than football fields are being dug out of the pine and spruce forests and muskeg swamps by many of the largest multinational oil companies,” Krauss reports. “Huge refineries that burn natural gas to refine the excavated gooey sands into synthetic oil are spreading where wolves and coyotes once roamed.”

Note well: They’re burning natural gas to get at this stuff.

Krauss adds:

About 82,000 acres of forest and wetlands have been cleared or otherwise disturbed since development of oil sands began in earnest here in the late 1960′s, and that is just the start. It is estimated that the current daily production of just over one million barrels of oil–the equivalent of Texas’ daily production, and 5 percent of the United States’ daily consumption – will triple by 2015 and sextuple by 2030. The pockets of oil sands in northern Alberta–which all together equal the size of Florida – are only beginning to be developed.

Be sure and click on the article’s multi-media link comparing the environmental depredations of producing a barrel of artificial oil from sands with those of conventional crude production.

The only way this process can make economic sense for the oil giants is if they succeed in externalizing these costs — i.e., shuffling them off of their balance sheets.