This story originally aired on Jan. 22, 2006.
There's an oil boom going on right now. Not in Saudi Arabia or Kuwait or any of those places, but 600 miles north of Montana.
In Alberta, Canada, in a town called Fort McMurray where, in the dead of winter, the temperature sometimes zooms up to zero.
The oilmen up there aren't digging holes in the sand and hoping for a spout. They're digging up dirt — dirt that is saturated with oil. They're called oil sands, and if you've never heard of them then you're in for a big surprise because the reserves are so vast in the province of Alberta that they will help solve America's energy needs for the next century.
Within a few years, the oil sands are likely to become more important to the United States than all the oil that comes to us from Saudi Arabia.
Correspondent Bob Simon reports.
Twenty-four hours a day, 365 days a year, vehicles that look like prehistoric beasts move across an arctic wasteland, extracting the oil sands. There is so much to scoop, so much money to be made.
There are 175 billion barrels of proven oil reserves here. That's second to Saudi Arabia's 260 billion but it's only what companies can get with today's technology. The estimate of how many more barrels of oil are buried deeper underground is staggering.
"We know there's much, much more there. The total estimates could be two trillion or even higher," says Clive Mather, Shell's Canada chief. "This is a very, very big resource."
Very big? That's eight times the amount of reserves in Saudi Arabia. The oil sands are buried under forests in Alberta that are the size of Florida. The oil here doesn't come gushing out of the sand the way it does in the Middle East. The oil is in the sand. It has to be dug up and processed.
Rick George, the Colorado-born CEO of Suncor Energy, took 60 Minutes into his strip mine for a tour. He says the mine will be in operation for about 25 years.
The oil sands look like a very rich, pliable kind of topsoil. Why doesn't oil come out when squeezed?
"Well, because it's not warm enough. If you add this to hot water you'll start the separation process and you'll see the oil come to the top of the water and you'll see sand drop to the bottom," George says.
It may look like topsoil but all it grows is money.
It didn't always. The oil sands have been in the ground for millions of years, but for decades, prospectors lost millions of dollars trying to squeeze the oil out of the sand. It simply cost too much.
T. Boone Pickens, a legendary Texas oil tycoon, was working Alberta's traditional oil rigs back in the '60s and remembers how he and his colleagues thought mining for oil sands was a joke.
"Here we are sitting there having a drink after work and somebody said this isn't going to, it isn't possible. It'll all have to be subsidized to a level, said, before they'd make money you'd have to have $5 oil," Pickens says laughing. "We never thought it would happen."
But then $40 a barrel happened and the oil sands not only made sense, they made billions for the people digging them. But it wasn't just the price of oil that changed the landscape, it was the toys. That's what they call the giant trucks and shovels that roam the mines.
Everything about the oil industry has always been big. It's characterized by bigness, from the pumps to the personalities. But up here in Alberta, it's frankly ridiculous. The mine operates the world's biggest truck. It's three stories high and costs $5 million. It carries a load of 400 tons of oil sands, which means, at today's oil prices, each load is worth $10,000 dollars.
What it's like to drive one of these monsters? At the foot of a tire, we asked the driver, Jim Locke.
"You have 14 steps going up, and at my house you have 14 steps to the bedroom. So it's like going upstairs in my house, sitting on my bed and driving the house downtown," says Locke.
But getting downtown is just the beginning. The oil sands then go into a plant. They're heated in a cell, which separates the oil from the sand. The result looks like something out of Willy Wonka's chocolate factory. This oil froth is then sent to an upgrader and eventually to a refinery.
Asked if the processed oil is as good as that pumped in Saudi Arabia, Mather says, "Absolutely as good as. In fact, it even trades as a, at a premium because it's high quality crude oil."