Current world oil reserves are estimated at 1.292 trillion barrels. The Middle East accounts for 58% of world oil reserves, and the Organization of Petroleum Exporting Countries (OPEC) accounts for 70%. The Middle East also leads in reserve growth and undiscovered potential, according to the Energy Information Administration (EIA). The United States' total oil reserves are estimated at 22.7 billion barrels, a scant 1.8% of the world's total (see Appendix A ). U.S. crude oil production is expected to fall from 5.4 million barrels per day (mbd) in 2004 to 4.6 mbd in 2030, while demand edges up at just over 1% annually. Net imports of petroleum are estimated by the EIA to increase from 12.1 mbd (58% of U.S. consumption) to 17.2 mbd (62% of U.S. consumption) over the same time period. When it comes to future reliable oil supplies, Canadian oil sands will likely account for a larger share of U.S. oil imports. Oil sands account for about 46% of Canada's total oil production, and oil sand production is increasing as conventional oil production declines. Since 2004, when a substantial portion of Canada's oil sands were deemed economic, Canada has been ranked second behind Saudi Arabia in oil reserves. Canadian crude oil exports were about 1.82 million barrels per day in 2006, of which 1.8 mbd or 99% went to the United States. Canadian crude oil accounts for about 18% of U.S. net imports and about 12% of all U.S. crude oil supply. An infrastructure to produce oil, upgrade, refine, and transport it from Canadian oil sand reserves to the United States is already in place. Oil sands production is expected to rise from its current level of 1.2 (mbd) to 2.8 mbd by 2015. However, infrastructure expansions and skilled labor are necessary to significantly increase the flow of oil from Canada. For example, many refineries are optimized to refine only specific types of crude oil and may not process bitumen from oil sands. One issue likely to be contentious is the regulatory permitting of any new refinery capacity because of environmental concerns such as water pollution and emissions of greenhouse gases. Challenges such as higher energy costs, infrastructure requirements, and the environment, may slow the growth of the industry. For example, high capital and energy input costs have made some projects less economically viable despite recent high oil prices. Canada ratified the Kyoto Protocol in 2002, which bound Canada to reducing its greenhouse gas (GHG) emissions significantly by 2012 but according to the government of Canada they will not meet their Kyoto air emission goals by 2012. The Pembina Institute reports that the oil sands industry accounts for the largest share of GHG emissions growth in Canada. Major U.S. oil companies (Sunoco, Exxon/Mobil, Conoco Phillips, and Chevron) continue to make significant financial commitments to develop Canada's oil sand resources. Taken together, these companies have already committed several billion dollars for oil sands, with some projects already operating, and others still in the planning stages. Many of these same firms, with the U.S. government, did a considerable amount of exploration and development on "tar sands" in the United States, conducting several pilot projects. These U.S. pilot projects did not prove to be commercially viable for oil production and have since been abandoned. Because of the disappointing results in the United States and the expansive reserves in Canada, the technical expertise and financial resources for oil sands development has shifted almost exclusively to Canada and are likely to stay in Canada for the foreseeable future. However, with current oil prices above $60 per barrel and the possibility of sustained high prices, some oil sand experts want to re-evaluate the commercial prospects of U.S. oil sands, particularly in Utah. This CRS report examines the oil sands resource base in the world, the history of oil sands development in the United States and Canada, oil sand production, technology, development, and production costs, and the environmental and social impacts. The role of government—including direct financial support, and tax and royalty incentives—is also assessed. Over 80% of the earth's technically recoverable natural bitumen (oil sands) lies in North America, according to the U.S. Geological Survey (USGS) (see Appendix B ). Canadian oil sands account for about 14% of world oil reserves and about 11% of the world's technically recoverable oil resources. Oil sands (also called tar sands) are mixtures of organic matter, quartz sand, bitumen, and water that can either be mined or extracted in-situ using thermal recovery techniques. Typically, oil sands contain about 75% inorganic matter, 10% bitumen, 10% silt and clay, and 5% water. Bitumen is a heavy crude that does not flow naturally because of its low API (less than 10 degrees) and high sulfur content. The bitumen has high density, high viscosity, and high metal concentration. There is also a high carbon-to-hydrogen molecule count (i.e. oil sands are low in hydrogen). This thick, black, tar-like substance must be upgraded with an injection of hydrogen or by the removal of some of the carbon before it can be processed. Oil sand products are sold in two forms: (1) as a raw bitumen that must be blended with a diluent (becoming a bit-blend) for transport and (2) as a synthetic crude oil (SCO) after being upgraded to constitute a light crude. The diluent used for blending is less viscous and often a by-product of natural gas, e.g., a natural gas condensate. The specifications for the bit blend (heavy oil) are 21.5 API and a 3.3% sulfur content and for the SCO (light oil) are 36 API and a 0.015% sulfur content. The USGS, in collaboration with the U.S. Bureau of Mines, concluded in a 1984 study that 53.7 billion barrels (21.6 billion measured plus 32.1 billion speculative) of oil sands could be identified in the United States. An estimated 11 billion barrels of those oil sands could be recoverable. Thirty-three major deposits each contain an estimated 100 million barrels or more. Fifteen percent were considered mineable and 85% would require in-situ production. Some of the largest measured U.S. oil sand deposits exist in Utah and Texas. There are smaller deposits located in Kentucky, Alabama, and California. Most of the deposits are scattered throughout the various states listed above. As of the 1980s, none of these deposits were economically recoverable for oil supply. They are still not classified as reserves (see Figure 1 ). Canadian oil sand resources are located almost entirely in the province of Alberta. The Alberta Energy and Utility Board (AEUB) estimates that there are 1.6 trillion barrels of oil sands in place, of which 11% are recoverable (175 billion barrels) under current economic conditions (see Table 1 ). Mineable reserves at the surface account for 35 billion barrels (20%) and in-situ reserves at 141 billion barrels (80%). The AEUB estimates that the ultimate amount to be discovered (ultimate volume-in place) is 2.5 trillion barrels: about 2.4 trillion in-situ and 140 billion surface-mineable. Of this ultimate discovered amount, about 314 billion barrels are expected to be recovered (175 billion barrels in reserves now and another 143 billion barrels anticipated. See Table 1 ). However, EIA estimates only 45.1 billion barrels (reserve growth and undiscovered potential) to be added to Canada's reserve base by 2025. Oil sands occur primarily in three areas of Alberta: Peace River, Athabasca, and Cold Lake (see Figure 2 below). Current production is 1.1 million barrels per day and is expected to reach 2.0 mbd by 2010 and 3.0 mbd by 2015. According to the International Energy Agency (IEA), Canada's oil sands production could exceed 5.0 mbd by 2033 but would require at least $90 billion in investment. As a result of recent high oil prices, 44 new oil sands projects are planned for Alberta between 2004 and 2012, 26 in-situ and 18 surface-mining. If all projects were to go forward, an estimated C$60 billion would be required for construction. Several of the projects are expansions of current operations. The National Energy Board (NEB) projects as much as C$81.6 billion being spent between 2006 and 2016. Eighty-two percent of the projected investment—expected to peak in 2008—is directed towards the Fort McMurray/Woods Buffalo Region of Alberta. A total of C$29 billion was spent on oil sands development between 1996 and 2004. Interest in U.S. oil sand deposits dates back to the 1930s. Throughout the 1960s and 1970s, 52 pilot projects involving mining and in-situ techniques were supported by the U.S. government in collaboration with major oil companies such as Conoco, Phillips Petroleum, Gulf Oil, Mobil, Exxon, Chevron, and Shell. Several steam-assisted technologies were being explored for in-situ production. These sources have had little economic potential as oil supply. The Energy Policy Act of 2005 ( P.L. 109-58 ), however, established a public lands leasing program for oil sands and oil shale R&D. Based on the Canadian experience with oil sands production, it was established that commercial success in mining oil sands is a function of the ratio of overburden to oil sand thickness.