Alberta's reserves of conventional erode oil, natural gas, heavy oil and oil sands represent more than 90% of Canada's total energy reserves in these categories. Of these. heavy oil and oil sands. constitute more than 60% of Alberta's total. Current forecast point out a decline in conventional reserves as production exceeds new discoveries. This trend is expected to continue with fewer and smaller prospects remaining to be discovered.

The decline in conventional reserves, however, could be made up by an orderly development of oil sands and heavy oil projects. Based on the magnitude of the unconventional reserves, (approximately 300 billion tonnes bitumen in place), one could observe that the prospects for maintaining Canada's energy self-sufficiency are contingent on the production of heavy hydrocarbons from oil sands and heavy oil.

The development of new surface mineable oil sands projects require large capital investment and their operations are labour intensive. Therefore, the total cost of synthetic crude production from new projects is not competitive with the most conventional production operations. However, oil sands have no exploration costs and present minimal exploration risks. In addition, the experience gained in oil sands operations during the last two decades has reduced actual production costs by one-half; but, the cost discrepancy between the conventional oil and synthetic crude oil, is significant enough to justify serious R&D efforts in oil sands.

This paper points out the importance of oil sands for the future energy supply in Canada and identifies the R&D as the key to further commercial development of this valuable resource. The paper proposes a methodology and a set of criteria for determining technology requirements and ranking them. Finally, it provider a select list of areas for technology development and offers a series of practical recommendations.