Most of Canada's oil reserves are located in its oil sands deposits, though not all of these are economical to extract.

Oil sands—also known as oil sands, tar sands, or bituminous sands—are sedimentary rocks containing a complex mixture of hydrocarbons, heavy metals and minerals. These hydrocarbons include heavy crude oil, asphalt and bitumen. The bitumen's consistency ranges from a molten liquid to a solid, depending on the temperature. It can be extracted from the sand by various processes, including mining and in situ production.

Oil sands are not the same as oil shale, a rock type containing solid kerogen which produces lighter oil when heated. Oil shale is not economically viable to produce as an energy source at the present time.

Oil sands are mined when they are located in shallow surface deposits. When they are found deeper underground, they often need to be steamed or heated to reduce viscosity and allow the bitumen to flow. About two tons of sand are required to produce one barrel of oil. While mines can produce about two-thirds to three-quarters of a barrel a day, in situ production techniques can produce up to one barrel.

This method of oil extraction is carbon-intensive, due to the need for large amounts of energy to heat or steam the bitumen. In addition, oil sand extraction impacts local ecosystems, as it requires a large area for the mine, plus large volumes of water for steaming or cooling. The water used is often way water, which damages local wildlife.

The byproduct of oil sand extraction is a thick, sludgy wastewater called tailings, which are loaded with toxins. These can be harmful to the local environment, meaning they must be stored in tailings ponds.

Overall, while oil sands extraction is a way to access Canada’s abundant energy reserves, the environmental and economic costs must be weighed against its rewards. As technology continues to improve and becomes more efficient, clean energy solutions may become increasingly viable alternatives.