CNN talking about Fort McMurray and the oil sands

The earth beneath Fort McMurray’s pine and spruce trees holds as much oil as the United States, Russia and the United Arab Emirates combined.

In this booming Alberta, Canada, town, the rush to get that oil becomes obvious a couple hundred miles north of Edmonton, where the forest disappears into the largest industrial zone in the world, crawling with some of the largest trucks ever made.

Jennifer Sims, who drives one at the Muskweg River Mine, north of Ft. McMurray, said it’s «pretty much like driving a two-story house.»

The mine is operated by Albian Sands Energy, a joint venture of Shell Canada, Chevron Canada and Marathon Oil Canada. The majority owner of the company, Shell, flew «Nightline» to the mine to show how every hour of every day, these enormous trucks carry tons of Canadian «oil sands» or «tar sands,» rich in a type of oil called bitumen, that in turn will become more than 8,000 gallons of gasoline. The «oil sands» have the consistency of chocolate cookie dough, but smell more like diesel gasoline.

There’s a swath of this stuff the size of Florida under this part of Canada and each one of those massive shovelfuls will produce 2,100 gallons of gasoline.

Watch the story tonight on «Nightline» at 11:35 p.m. ET

Thanks to this tarry goop, Canada’s oil reserves are second only to Saudi Arabia. But unlike the sweet, light crude that flows out of the Saudi desert, this type of oil must be strip-mined — or steamed and pumped — from the sand and clay.

They burn natural gas by heating up to four barrels of river water to separate out the bitumen. Next, hydrocarbons are added in order to produce one barrel of oil, which in turn is refined into products like gasoline and jet fuel.

Leading by Example

The process produces two to three times more global warming pollution than conventional oil drilling. That might not matter to some countries, but this is Canada, the country that signed the Framework Convention on Climate Change, usually referred to as the Kyoto Accord, and promised to reduce global warming faster than any nation.

But a decade ago, oil sand was considered more trouble that it’s worth.

«Canada likes to think of itself as, you know, an environmental leader,» said Dan Woynillowicz, director of strategy and external relations for the Pembina Institute, «and yet that seems to have been taken over by the federal government’s belief that Canada is and should be an energy superpower.»

Canada is seeing economic development on a scale never seen before, especially in Alberta, said Brian Maynard, vice president of the Canadian Association of Petroleum Producers.

The oil companies plan to double the $100 billion already invested in Alberta. The influence shows in the gleaming office towers of Calgary and in the lustrous pick-up trucks on the streets of Ft. McMurray, the town closest to the mines, where the boom in oil sands business has led the city to be called «the wild west» by some residents.

Jim, described the town as «the Wild West.»

This former fur trading post is known to many as «Fort McMoney.» It’s a place where a 21-year-old truck driver can show up and make $150,000 a year.

Big Money, Big Worries

With nearly zero unemployment, businesses are begging for warm bodies and residents face staggering inflation. A dire housing shortage means rent on a two-bedroom goes for over $2,300 a month. Buying a mobile home can cost half a million Canadian dollars.

«It’s ridiculous,» said Scott, who works in the oil industry but didn’t give his last name. «I swear for $500,000, back in Ottawa, our nation’s capital, I can get a mansion with servants and maids.»

As a result of high prices and no vacancies, few men bring their families and instead live in massive labor camps near the mines.

Many spend their money on more than just whiskey. Drug use is not uncommon.

«Everybody’s more into crack or cocaine ‘cause it’s only in your system for a couple of days,» Scott said, for no other reason that it won’t show up in a drug test after a couple of days.

Anne Lastiwka, a 20-year resident, said cocaine addictions have shattered many local families. But she and other long-time residents remember the town Fort McMurray used to be and hate the «wild west» image now attached to the city.

«There was a time when, honestly, this was a real family community,» Lastiwka said. She insisted that is still the case.

Full-Steam Ahead

Two years ago Mayor Melissa Blake asked the provincial government and the oil companies to slow development so the town could catch up; they now have twice as many escort services as clinics.

«It’s, you know, wonderful and exciting,» Blake said, but also acknowledged the challenges of such explosive growth. «It’s beyond our capabilities presently, but we want more than anything else to match pace with the growth that we are experiencing.»

But for now, there’s no sign of slowing.

By 2020, the goal is to triple production to near four million barrels a day, enough to power the lives of one in five Americans. Environmental watchdogs cringe at the thought and argue that it won’t result in cheaper gas now or later.

«It’s not like Saudi Arabia where they drill another well, and they’ve got a gusher,» Pembina Institute’s Woynillowicz said. «So in the short term, the tar sands are not going to be some silver bullet that brings global prices down or … secure oil into the North American market.»

Oil at What Cost?

Three-quarters of Canadians polled approved of the Kyoto Accord, which would require their nation to reduce global warming pollution by 35 percent.

Thanks largely to oil sands, Canada has actually increased its carbon emissions by 27 percent.

Other impacts are obvious as well. Tailing ponds — man-made reservoirs filled with toxic waste water — can be seen from this space and this spring, 500 ducks died in one of these ponds, heightening concerns that land, air and water are being poisoned.

«Concerns are concerns. People have concerns,» said Maynard, of the Canadian Association of Petroleum Producers. «They are fair concerns. I’m not one to say if they are fair or not.»

But rather than halting development to allay fears of environmental damage, Maynard insisted the oil industry has been successful in the past at addressing those concerns when it can operate and generate profits that it can in turn reinvest in new technologies to meet the environmental challenges.

Early opponents to the oil sands development were the tribes of the First Nations — native North Americans who lived and hunted in this forest for centuries.

But now, many work for the oil companies, and at a fund-raiser held by the Fort McKay First Nations tribe, Shell executives are honored guests.

«If it wasn’t for the oil sands, we would have no economy,» Fort McKay Chief Jim Boucher said. «So to be pragmatic and practical about it, the alternative is to do nothing and sit there and collect welfare or to be a part of the economy. And I’d rather be a part of the economy than let our people be there collecting welfare.»

Other tribes that live miles downstream from the mines are still opposed. They say there has been a spike in rare cancer cases, and they are concerned it could be the result of oil sand mining. There is a study under way, but no science as of yet to back up those claims.

Meanwhile, the oil industry is spending $25 million circling the public relations wagons, promising that new technologies will allow them to expand without destroying the land or heating the planet.

Those promises have yet to be proven. And there is little evidence to support their claims that these mines can be turned back into forest.

But Maynard said the oil companies will not fail and cannot afford to fail.

«If there is anybody that can do that, to address these challenges,» he said, «it is the oil and gas industry.»