Reporter: Liam Bartlett
Producers: Nick Greenaway and Glenda Gaitz
We don't have to tell you about the world fuel crisis, we all feel the pain every time we drive into a service station.
But here's something you may not know.
There is an answer and part of it's right here in our own backyard.
We are talking about shale oil.
There are huge deposits here in Australia, just waiting to be exploited.
Then there are oil sands, which are already being mined on a massive scale in the wilds of Canada.
It's an amazing sight, this new frontier.
With tales of untold riches and untapped oil, enough to last more than a hundred years. But, as Liam Bartlett discovered, there is a catch.
PHOTOS: Liam Bartlett experiences the dirty landscape of the Alberta oil sands.
Dr Adrian Hutton/ Leslie White
Telephone (02) 9327 2553
INTRODUCTION PETER HARVEY: I don't have to tell you about the world fuel crisis, we all feel the pain every time we drive into a service station. But here's something you may not know. There is an answer, and part of it's right here in our own backyard. I am talking about shale oil. There are huge deposits here in Australia, just waiting to be exploited. Then there are oil sands, which are already being mined on a massive scale in the wilds of Canada. It's an amazing sight, this new frontier. With tales of untold riches and untapped oil - enough to last more than a hundred years. But, as Liam Bartlett discovered, there is a catch.
STORY LIAM BARTLETT: It's the blackest boom in history. An oil rush the likes of which the world has never seen. Welcome to crude's last frontier - Alberta, Northern Canada. Up here they don't drill for oil, they dig for it. Looking at it from here, it's hard to believe that this is the second biggest supply of oil in the world, second only to Saudi Arabia.
SIMON DYER: Almost as far as the eye can see you can see tailings ponds and mines in the background, but I want to stress this is only the top of the iceberg. The total mining area is going to be nine times larger than what we see here currently.
LIAM BARTLETT: This may well be the answer to the world's fuel crisis. At least 175 billion barrels of crude oil trapped below the surface just waiting to be converted into petroleum. The hard part - getting it out. Unlike conventional oil fields, here, the oil is trapped in the sand and extracting it, is difficult, dirty and hugely expensive. This is what all the fuss is about. A mixture of sand, clay and very heavy crude oil better known as bitumen. That's the overpowering smell too, it really does has that whiff of a newly-laid road. Now, to get the bitumen out you have to heat it up with lots of water at a very high temperature, then process it, refine it, and presto - synthetic crude oil. Black gold - and plenty of it.
CHRIS JONES: In the back of a 400 tonne truck there's 200 barrels of oil.
LIAM BARTLETT: 200 barrels?
CHRIS JONES: That's enough to run your car for its entire life.
LIAM BARTLETT: That's an enormous amount of oil coming out of this hole in the ground isn't it?
CHRIS JONES: We have a lot of customers.
LIAM BARTLETT: Chris Jones is chief operating officer of Shell's Albian Sands mine. It is the newest producer of oil here and within a few years will be the biggest.
LIAM BARTLETT: How many barrels do you think you have here altogether?
CHRIS JONES: Oh, there's hundreds and hundreds of millions of barrels that we have. Our reserve is good enough for about 30 years at about 60 million barrels a year.
LIAM BARTLETT: The massive expense of extraction has always made oil sand mining a marginal investment. But in the last ten years, as world oil prices sky rocketed, it has gone from humble alternative to booming business. And the oil barons are moving in. Today there's $120 billion of investment on the table. And for workers prepared to brave the freezing winters and sweltering summers, there's individual fortunes to be made. Can I ask you how much you earn driving one of those things?
CARRIE SIMMS: We do OK. We do fine. We ah... you want numbers?
LIAM BARTLETT: Give me a hint.
CARRIE SIMMS: Um, we could go six figures.
LIAM BARTLETT: Really?
CARRIE SIMMS: Really.
LIAM BARTLETT: More than $100,000 to drive...
CARRIE SIMMS: ..a $5 million truck.
LIAM BARTLETT: What sort of car do you normally drive?
CARRIE SIMMS: I drive a Volkswagen.
LIAM BARTLETT: A Volkswagen?
CARRIE SIMMS: I drive a Volkswagen.
LIAM BARTLETT: This is your alter ego coming out driving this thing?
CARRIE SIMMS: A little bit, yes, absolutely. So are you ready to go up?
LIAM BARTLETT: Yeah I'm ready, take me away. Before she became a truckie, Carrie Simms was teaching Braille to special needs children. Now she's working 12 hour shifts and loves every minute of it.
CARRIE SIMMS: There...
LIAM BARTLETT: OK, gotcha.
CARRIE SIMMS: ..and I'll get mine on. Then we'll be good to go.
LIAM BARTLETT: No jokes about female drivers.
CARRIE SIMMS: None.
LIAM BARTLETT: In these mines, the trucks never stop, not even for Christmas - so great the demand, so profitable the sand. And the workers like Carrie are reaping the benefits. The boom has made the frontier town of Fort McMurray, the richest in Canada. Here, the average annual wage is well over $100,000 and downtime is play time. And it really is a boom town isn't it?
GERMAIN ROUTHIER: Yeah, right now it is a boom town. People are crazy here on weekends. You go downtown, it's just completely crazy.
LIAM BARTLETT: But they're all getting paid a lot of money?
GERMAIN ROUTHIER: A lot of money, yep. And with a lot of money I guess you have a lot of fun - if you're younger.
LIAM BARTLETT: Germain Routhier has seen it all unfold. He started work in oil sands back in 1967. His first pay cheque was $250 a week. That's what they paid the pioneers of an industry considered then little more than a novelty. You were here the day the first barrel came off the production line?
GERMAIN ROUTHIER: I was here, yep. It was a very exciting day for many, many people to see that it really worked.
LIAM BARTLETT: And 40 years later, they're producing 250,000 barrels of oil a day from here.
GERMAIN ROUTHIER: Can you believe it?
LIAM BARTLETT: Would you ever thought that possible?
GERMAIN ROUTHIER: No, never, never. But I was wrong, because they proved me wrong.
LIAM BARTLETT: Within the next decade total production of oil from these mines will exceed 5 million barrels a day. Just to put that into perspective that's nearly 10 times the amount we produce in Australia. Yet back home, we've known the secret of hidden oil reserves for more than 100 years. Not in the sand, but in the rocks.
LIAM BARTLETT: Is that the oil burning?
DR ADRIAN HUTTON: That's the oil burning.
LIAM BARTLETT: Mate, look at that, look at the end glowing, I can't believe that.
DR ADRIAN HUTTON: It is so rich.
LIAM BARTLETT: You're burning rock!
DR ADRIAN HUTTON: You're actually burning rock. Yes, exactly.
LIAM BARTLETT: It's called shale oil. And with local petrol prices heading towards $2/litre, Dr Adrian Hutton believes deposits like this one in the southern Highlands of NSW are the future of our oil industry.
DR ADRIAN HUTTON: Australia has somewhere between 24 and 30 billion barrels of oil equivalent. Meaning when we heat the rock we'll get 24 to 30 billion barrels of oil out of the rock.
LIAM BARTLETT: That's a lot of barrels.
DR ADRIAN HUTTON: That's a lot of barrels.
LIAM BARTLETT: A lot of money. Dr Adrian Hutton: A lot of money. They built an industry from nothing, from the ground up.
LIAM BARTLETT: 150 years ago shale oil was a booming Aussie business but then other easier-to-tap supplies like Bass Strait were discovered, sending the industry into hibernation. In the '90s, we produced all the oil we needed. Now, as supplies dwindle, we must import 40%. When the Bass Strait reserves run out, we're in big trouble.
DR ADRIAN HUTTON: I think perhaps one of the bigger things is, in fact, perhaps our Australian culture. We've had plentiful supply of oil from Bass Strait, from the Northwest Shelf, it's been relatively cheap, so she's right mate, we don't need shale oil at the present time.
LIAM BARTLETT: Until we completely run out of Bass Strait oil.
DR ADRIAN HUTTON: Well I think that's going to be a catastrophe when we run out of Bass Strait oil. We'll be all crying, "We have no petrol for our motorcars." Yet we have these huge resources, which, if we start to develop, we could bring on-stream.
LIAM BARTLETT: But if we did, we'd have to weigh up the benefits of fuelling our cars against a huge environmental impact. Shale oil is viewed as one of the dirtiest of all fuels. Mining shale oil could poison our landscape in the same way that the oil sands industry is affecting the Canadian wilderness. There is literally tens of billions of dollars worth of oil trapped in the sands here at Fort McMurray. The trouble is getting it out comes at a heavy cost. It takes an enormous amount of water, produces huge greenhouse gases and spews out tonnes of toxic waste. But with the world fast running out of easy oil, the question is what price are we prepared to pay to dig it up?
SIMON DYER: It is one of the largest intact forests in the world. There are three great forests remaining in the world: the Amazon, the Canadian boreal forest and the Russian boreal. And as you can see we're going to be... we're going to be tearing this up to extract oil from the oil sands.
LIAM BARTLETT: This is right up there with the Amazon?
SIMON DYER: That's correct, yeah. It' larger, larger than the Amazon.
LIAM BARTLETT: Nearly 4,000 square kilometres of pristine forest is being ripped up to get to the oil and scientists like Simon Dyer crying foul.
SIMON DYER: I think the oil sands represent the bottom of the barrel in terms of our search for oil. They are the poster child for how desperate we've become to maintain access to oil and the fact that we're willing to move four tonnes of material to extract a single barrel of oil, just demonstrates that we need to start thinking about more sustainable solutions to to meet our transportation and energy needs.
LIAM BARTLETT: The most immediate problem of oil sands mining are the vast tailing ponds of toxic waste it produces. Only a few weeks ago 500 ducks perished when they thought they were landing on fresh water.
SIMON DYER: The industry is producing 1.8 billion litres of tailings every day and it basically gets emptied into these massive waste water lagoons. But the much bigger issue is that the industry hasn't been able to demonstrate how to reclaim these toxic lakes.
CHRIS JONES: Remember, this is a transitory use of the land and our job is not to necessarily make it pretty, it's to make it effective, it's to make it safe and its to make it economic.
LIAM BARTLETT: Do you really think that you're going to be able to rehabilitate that?
CHRIS JONES: Yeah, we've promised, we've promised that we would to the province.
LIAM BARTLETT: Are you serious? Have a look at it.
CHRIS JONES: What you're looking at is the hole, not the reclamation.
LIAM BARTLETT: That's a mighty big hole. But in all the years all these operations, including yours, have been going, so far they've only managed to rehabilitate one square kilometre.
CHRIS JONES: And that was... one of the other operations up here was able to do that. Now they've been in business since 1978.
LIAM BARTLETT: But that's 30 years and they've got one square kilometre rehabilitated?
CHRIS JONES: Yeah, of release. And in the province...
LIAM BARTLETT: You've got to say that's pathetic.
CHRIS JONES: I wouldn't say that at all.
LIAM BARTLETT: But for now, in Fort McMurray, the environmental protests are being drowned out by the economic boom. Try telling workers like 24-year-old Tom Rus that earning $160,000 a year is bad thing. All the young blokes in this town like you have got cars this size?
TOM RUS: Everyone's got a toy, right. It doesn't stand out in this town 'cause everyone has one of those.
LIAM BARTLETT: All you blokes are driving around town in these things as if oil is going to last forever?
TOM RUS: Well, I hope so. 'cause if it doesn't, I, um, this truck's going back.
LIAM BARTLETT: That's not going to happen any time soon. The world's thirst for oil and spiralling prices at the bowser will make sure of that. And Australia is set to join the black gold rush. It is anticipated the first shale oil operations are will be up and running in the next few years.
DR ADRIAN HUTTON: Unless we find some alternative, I think we are going to have to mine shale oil and there's no alternative at this stage that I can see, none being developed.
LIAM BARTLETT: There must be a lot of oil out there?
CHRIS JONES: There's a batch of oil out here. A couple of hundred of years' worth.