Turn on the television or open up a newspaper, and chances are someone is discussing Alberta's oil sands: boasting how the viscous hydrocarbon will bring riches to Albertans; marvelling about the gigantic equipment used to mine and process the resource; or perhaps lamenting that the workforce isn't there to complete the billions of dollars worth of projects forecast for the years to come.

But take a closer look, and you'll uncover a fascinating tale of how this tarry substance is paving the way to Alberta's energy future.

What it is, where it is, and how it got there

The oil sands is a mix of naturally occurring bitumen, a thick, sticky oil, and abrasive sand. Each sand grain is coated by a layer of water and a layer of heavy oil, which forces producers to constantly search for efficient ways to pry apart these components.

Geologists speculate that the oil sands formed millions of years ago from the remains of tiny creatures buried in the seabed of an ancient ocean that covered Alberta. Warm temperatures, combined with the slow accumulation of thick layers of silt and sand, pressure cooked these remains and converted them into oil.

This oil eventually migrated, saturating large areas of sand near the surface. Bacteria then feed on the lighter hydrocarbon chains in the oil, leaving behind only the molasses-like bitumen.

Alberta sits atop the largest known deposit of oil sands in the world. The sands are sourced in three main areas: the Athabasca, Cold Lake, and Peace River, which combined cover a 140,800-square-kilometre area. The deposits are buried at varying depths beneath the earth's surface and are mostly covered by muskeg, sandstone, and shale, which together are known as "overburden."

While the energy industry strives to develop new production methods to better tap the oil sands, the ERCB ensures that the resource is recovered in a manner that is orderly, efficient, and in the public interest.

Early history

Interest in the oil sands started early, when the Hudson's Bay Company first learned of its existence in the 1700s.

The Geological Survey of Canada began exploring the oil sands in the late 19th century and was the first to successfully separate bitumen from the sand using water. However, it took another two centuries to develop economic methods to exploit the resource.

Failures, then success

Throughout the first half of the 20th century, many an entrepreneur tried different methods to extract and refine the bitumen, although none achieved commercial success. This would forever change in 1963 when U.S.-based Sun Oil invested almost a quarter-billion dollars in the Great Canadian Oil Sands (a venture that later became Suncor), a large-scale commercial operation 30 kilometres north of Fort McMurray.

Construction on the project began in 1964, and three years later the world's first oil sands facility started producing 7,150 cubic metres (45,000 barrels) per day.

That project represented the first major oil sands mining operations in northeast Alberta. By 1978 Syncrude Canada, a joint venture among numerous private and public sector stakeholders, launched a rival operation north of Fort McMurray with daily output of 17,300 cubic metres (109,000 barrels) a day.

Did you know? In 1976, employees at the Suncor oil sands site in Fort McMurray discovered the bones of a woolly mammoth, which has since been donated the Royal Alberta Museum in Edmonton.

By the time Albertans were welcoming the new millennium, interest in oil sands projects had reached a frenzied pace as energy companies, lured north by the promise of vast reserves and buoyed by surging oil prices, sought out more efficient means of bitumen extraction. With this, the ERCB's role to ensure that the development is done fairly and responsibly has become even more crucial. The ERCB has effectively processed around two dozen applications since 2000.

For more on the history of Alberta's oil sands, click on the Oil Sands Discovery Centre. (www.oilsandsdiscovery.com)

The Resource

Including the oil sands, Alberta has the second largest petroleum reserves in the world, second only to Saudi Arabia. About 27.6 billion cubic metres (175 billion barrels) of bitumen are locked in the northern sands. Currently, industry extracts around 236,700 cubic metres (1.49 million barrels) of bitumen each day, which represents about 76 per cent of the province's total crude oil production, a rate expected to rise to 429,000 cubic metres (2.7 million barrels) by 2015.

Economics

In fiscal 2004, the Alberta government collected $718 million in royalty payments from oil sands output, money used to pay for infrastructure, services, and programs for all Albertans. As oil sands companies recoup their capital investments (most projects run into the billions of dollars), the royalties paid to the province will increase.

The rise of world oil prices are determined by global supply and demand forces, which are themselves influenced by factors ranging from weather to geopolitical events. The price of oil fluctuates often, creating a challenge to forecast potential earnings and make investment decisions.