The two largest known sources of bitumen in Alberta and Venezuela, where each contains more petroleum than the entire proven conventional oil reserves of the Persian Gulf. Synthetic crude oil produced from bitumen accounts for about 28% of Canada's total oil production. Compared to conventional oil (obtained from traditional, easily accessible sources), however, synthetic crude from bitumen is expensive and complicated to produce.

Unlike conventional crude oil, bitumen does not flow freely. It is heavier than water and more viscous than molasses. Most of the hydrocarbons in bitumen are heavier than pentane (C₃H₈), and about half are very heavy molecules with a boiling point over 525°C. The light fractions are high in naphthenes (used in making gasoline and petrochemicals); the heavy fractions are high in asphaltenes (used in making asphalt). Bitumen also contains up to 5% sulphur (S) by weight, and small amounts of oxygen (O₂), heavy metals and other contaminants.

Most deposits contain mixtures of bitumen, water, sand, small amounts of heavy metals and other contaminants. In its natural state, bitumen is suitable only for paving roads. Compared to conventional crude oil, bitumen contains very much amount of carbon and very small amount of hydrogen.

In making synthetic crude oil, special refining processes are used to remove impurities and correct the carbon-hydrogen imbalance. Most Canadian refineries require this type of feedstock. To deliver bitumen to those refineries equipped to handle heavy crude oil, it must first be diluted with natural gas condensate or similar material to make it pumpable.

Bitumen Extraction
As mined commercially, Oil sand contains an average of 10-12% bitumen, 83-85% mineral matter and 4-6% water.

(Oil sands, also known as tar sands, or extra heavy oil, are a type of bitumen deposit. The sands are naturally occurring mixtures of sand or clay, water and an extremely dense and viscous form of petroleum called bitumen. They are found in large amounts in many countries throughout the world, but are found in extremely large quantities in Canada and Venezuela.)

A film of water coats most of the mineral matter, and this property permits extraction by the hot-water process. The oil sand is put into massive rotating drums and slurried with warm water and some steam. Droplets of bitumen separate from the grains of sand and attach themselves to tiny air bubbles. Conditioned slurry is passed through a screen to remove rocks and large pebbles and pumped into large, conical separation vessels where a froth of bitumen is skimmed from the top containing about 65% oil, 25% water and 10% solids. The coarse sand settles and is pumped to disposal sites. Some of the smaller bitumen and mineral particles remain in an intermediate water layer, called middlings and are pumped onto a separation vessel similar to the one mentioned above.

Generally, 88-95% of the bitumen in the mined ore is recovered. Coarse sand from the primary separators is used to build dikes, forming the large tailings ponds needed to contain the effluent. In these ponds the fine particles settle slowly, producing clarified water that is reused in the extraction process. The fine particles do not consolidate to their original density, so every cubic metre of oil sand mined creates 1.4 m³of material for disposal. Removal of the contaminants from the froth stream is achieved through dilution with naphtha followed by two stages of centrifugation. Syncrude has recently installed inclined-plate gravity settlers in series with the centrifuges. About 98% of the bitumen in the froth is recovered. The water needs of a large project like Syncrude are substantial, amounting to about 0.4% of the average flow of the Athabasca River.

Economic and environmental incentives still exist to improve recovery, reduce heat and water requirements, and shrink or eliminate tailings ponds. Consequently, many alternatives have been investigated over the years, including retorting, solvent extraction, addition of chemicals, spherical agglomeration and the use of oleophilic sieves and hydrotransport. Of these, hydrotransport features largely in Syncrude's expansion; the slurry is pumped from the mine face up to about 10 km to the extraction plant. Such means are a good substitute for the large rotating drums mentioned earlier.

Bitumen Upgrading
Suncor and Syncrude both use coking processes to remove carbon from the heavy fractions of bitumen. Coking involves thermally cracking the heavy fractions (at 468-498°C) to produce lighter fractions (eg, gasoline, fuel gas) and petroleum coke (some of which may be used as fuel). At Syncrude, fluid coking, a high temperature process (530°C) produces slightly less coke and more liquid hydrocarbons than the delayed coking used by Suncor. As new extraction technology is implemented, the cost of producing bitumen decreases, thus favouring use of delayed cokers. Suncor continues to burn coke in its boilers but is increasingly concerned by the intense emissions of sulphur dioxide (SO₂).

Hydrocracking processes, which add hydrogen, offer higher liquid yields, better distillate qualities and lower emission levels of sulphur dioxide (SO₂), but at much greater expense. The catalysts used in the hydrocracking process rapidly lose their needed properties as they become fouled by the vanadium in the bitumen. Consequently, alternative processes that provide continuous replacement of catalyst have been demonstrated. But they are losing favour as the supply cost of bitumen decreases. Much hydrogen is used in the hydrocracking process and it is most economically derived from steam cracking of methane. Yet methane (CH₄) is becoming more and more expensive as it becomes the preferred fuel of North America.

The distillates obtained from the hydrocracker, the delayed coker and the fluid coker are good feedstock for a conventional refinery. However, such distillates are "live," tending to polymerize and foul surfaces, and must be mildly hydrotreated before being pumped through pipelines to distant refineries. This mildly hydrotreated feedstock is called synthetic crude.

The future of oil sands production appears to be extremely positive as gradual implementation of new technology makes the industry more competitive with international suppliers.