This paper presents a practical, yet financially sound, real options framework to evaluate Canadian oil sands projects. The framework considers oil and natural gas price uncertainties, as well as managerial flexibilities in their decision making process. The Canadian oil sands hold the world's third largest oil deposit. To process oil sands into a usable source of energy, an extensive amount of natural gas, which has a highly volatile price, is required. We show that the importance of natural gas price and its volatility on the optimal investment policies is fading, as the price has decreased significantly in recent years.