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How did the quest to retrieve the treasure hidden beneath huge swaths of northern Alberta go from fool's errand to monumentous payoff?

What does becoming a global energy player mean for Canada's future?

The Globe's Erin Anderssen, Shawn McCarthy and Eric Reguly tackled those mega-issues Saturday in the first instalment of "Shifting Sands," an eight-day look in the newspaper and on the Web at how the Alberta oil sands are changing Canada forever.

"A decade ago, the oil sands had resembled a massive boondoggle, backed by only a few believers who struggled to attract capital for faltering projects," they wrote in their article An empire from a tub of goo

"Now, the race to profit off that pile of dirt spread across an area the size of Florida is transforming the country.

"Oil production in northern Alberta is expected to quadruple to more than four million barrels a day by about 2020, if all the projects proposed go ahead.

"Virtually every major oil company in the Western world has picked up a piece of the action, investing nearly $90-billion to create what promises to be the biggest industrial project on Earth and sparking predictions that Canada will become what Prime Minister Stephen Harper calls an "energy superpower."

"The oil sands are seen as a crucial source in a world of increasingly tight supply, where many reserves are in politically volatile regions controlled by undemocratic states. Put another way: Should they disappear tomorrow, one industry expert estimates, the price of oil could jump a third to $130 a barrel.

"The value and importance of the oil sands will make that much harder the choices that Albertans and all Canadians suddenly face.

"Canada has now become a major-league merchant of one of the most desirable — and dirtiest — sources of energy.

"The money is flowing in, and the profits are rolling out — good news for stockholders, the Canadian dollar and government coffers.

"But there are environmental and social costs to stuffing our pockets while the oil speeds south.

And Canadians will have to answer a question already being asked by many Albertans: When does a boom become a burden?

These are provocative questions and we're pleased that Ms. Anderssen, Mr. McCarthy and Mr. Reguly were online earlier today to answer your questions about their article, about the oil sands, and about the project's impact on Canada and the world.

Your questions and their answers appear at the bottom of this page.

Erin Anderssen joined The Globe and Mail in 1997

She has covered politics, crime and social trends, and now writes features for the newspaper.

She has won four National Newspaper Awards, and co-wrote New Canada, a book based on a Globe and Mail special project.

Shawn McCarthy covers global and national energy issues, from public policy matters and international disputes to consumer trends and innovations in alternative energy.

He previously has worked as The Globe's correspondent in New York and served three years as Ottawa bureau chief. He has also covered government finances and economic affairs for The Globe.

Eric Reguly also joined The Globe in 1997, writing the paper's main business column from Toronto. Last April, he became the Globe's European business correspondent, based in Rome.

Eric has won several awards for his work, including, in 2007, the Hyman Solomon Award for Excellence in Public Policy Journalism

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Jim Sheppard, Executive Editor, globeandmail.com: Welcome, Erin, Shawn and Eric. Thanks for joining us today to take questions from the readers of globeandmail.com on your Focus article Saturday kicking off our eight-day series on the Alberta oil sands.

Before we get to the reader questions, I'd like to start by asking you all this.

The oil sands is a mega project with vast implications for Canada and the world. It's been kicking around for a long time and it's been the subject of a lot of debate. You all spend a considerable amount of time researching and writing the big Focus cover story about its impact.

What, if anything, did you learn in your research and writing that you weren't expecting or that surprised you?

Erin Anderssen: What I think is the hardest thing to fathom is the sheer size of this development from all aspects — the amount of capital investment, the environmental impact, the kind of a labour force that will be needed to keep it going.

When you travel to Fort McMurray, and you see how far the mining operations have spread across the landscape, it really is quite incredible.

And then to understand that this is only a fraction of the kind of development proposed in the future, you can begin to comprehend how daunting — and complex — managing this resource is going to be for Alberta and the country.

Shawn McCarthy: Hi, Jim. One thing that struck me very forcefully is just what an enormous technological effort has been required to make the oil sands commercially viable.

I know that major technological advances have been the hallmark of the oil industry — allowing for horizontal drilling and deep water exploration.

But the oil sands story is really far more about engineers more than geologists. And it will have to be the engineers who find the answers to the daunting environmental challenges — and cost pressures — that must be overcome if the huge potential of the resource is going to be exploited in a sustainable manner.

Eric Reguly: One thing that surprised me from my perch in Europe is the international view of the oil sands (which didn't make it into the opening article).

Canada likes to think of itself as a "emerging energy superpower" — Stephen Harper's words.

European oilmen, analysts and economists have a different view. They consider it no more than an middling energy power.

Fatih Birol, the chief energy economist of the International Energy Agency in Paris, told me the oil sands would, at best, "make an important dent" in the global oil supply chain.

The IEA predicts global oil demand at about 110-million barrels a day in 2030 (compared to about 86-million a day now).

By that date, it expects "unconventional production" to account for 10 per cent of all production. The Alberta oil sands will be the biggest part of that 10 per cent. The rest will come from similar deposits in Venezuela. So, if you back out Venezuela, Alberta might account for seven per cent of global oil demand two decades from now.

Hardly superpower status.

Nor does Canada seem intent in using its energy exports for political purposes. Russia never hesitates on this front. It can turn out the lights in Western Europe by withholding natural gas supplies (and has done so).

To the Europeans, Russia qualifies as a genuine energy superpower. Canada is a mere pretender.

Andrei de Souza, Toronto: Much has been said of Canada's ascendancy to energy super power status. But a more accurate description is surely energy super supplier.

We seem destined to reap astounding financial rewards from the development of our resource. But the power and control lies elsewhere to a large extent.

Russia is what a real energy super power looks like. They control their resources. They are in control of the decision-making, and their resources are being used more effectively not just to gain political clout and leverage, but to bolster Russian industry.

We seem intent on shipping our resource to foreign refineries and to rival chemical industries in the U.S. Why are Americans getting rich off our oil? It is so short-sighted. We're behaving like a banana republic.

Shawn McCarthy: Andrei, the provincial government owns the resources and has the right ito set the pace of development.

The oil companies have to apply to the provincial Energy Board for approval of their projects, and are subject to hearings.

Clearly, the Alberta government has decided to allow the pace of development that has been approved so far, but not all the proposed projects are, in fact, approved.

Alberta has also encouraged companies to build upgraders in the province to get more benefit from the resources, though that is not a firm rule.

We, Canadians, are not "shipping our resources" south — the Albertans who own them and the companies that invest in developing them are selling the oil at a very nice profit.

Russia is a complex story. Yeltsin made some very bad deals when the country was broke and oil was cheap. Putin is reversing those.

But it's questionable whether most Canadians would want to see the Harper government wield the oil clout the way Putin has used oil as a geopolitical weapon.

Robert Miller, Halifax: Yes, there is definitely a lot of oil in Canada.

The bigger question is: Are we going to follow Norway's lead on how to manage these resources or that of some Third World country? How does the average citizen benefit from their own country's resources?

Shawn McCarthy: Hi Robert, I would make the same point to you that I made to Andrei.

Under the Canadian Constitution, the resources belong to the province, not to the country as a whole.

Unfortunately for the Atlantic provinces, that same rule did not apply to offshore resources, and they had to cut deals with the federal government to better benefit from offshore development.

Still, Nova Scotians, like Canadian everywhere, have taken advantage of Alberta's boom by traveling there to work. They also benefit from the huge tax revenues that the federal government receives from Calgary-based oil companies and rich Albertans.

Still, it is fair to ask about the proper share in the division of the spoils. Alberta itself went through that exercise recently when it increased royalty rates.

Eric Reguly: Good question. The answer is that Albertans, and Canadians, stand to benefit less from the oil wealth than the Norwegians and the Alaskans.

Alberta made a big mistake in setting extremely low royalty rates — among the lowest in the world — on new oil sands projects.

The upshot is that Alberta Heritage Fund is tiny, relatively speaking, compared to its equivalents in Alaska and Norway.

My figures are a year or so out of date, but they give you an idea. Norway's Petroleum Fund was worth about $200-billion US. Alberta's was worth about $13-billion US.

On a per-capital basis, Alaska's fund was worth $50,000 US. Alberta's was worth $4,200 US.

So which of the three has spread the wealth around? Not Alberta Which of the three has the least amount of money to diversify its economy? Not Alberta.

Normand Leblanc: If production reaches four millions barrels per day at $100 US per barrel, how much money will the provincial and federal governments be making?

Also, Wikipedia says there are 1.7 trillion barrels in the oil sands. The official figure is 175 billion barrels (10 times less). Which one is the correct amount?

Erin Anderssen: Hi, Normand: The numbers are talking about two different things.

The larger number is the total amount of oil believed to be lying in the ground underneath Alberta's boreal forest.

The smaller figure — 175-billion barrels — is the amount of recoverable oil believed to be accessible at a reasonable cost based on current technology.

Shawn McCarthy: Hi, Normand. We haven't done the math on federal and provincial takes — it depends on how much the oil costs to produce and on the price differential between the high-quality $100 oil and the lower-quality oil sands product.

The 1.7-trillion barrel estimate of reserves represents all the oil that is in the ground and the 175-billion-barrel figure represents what can be developed profitably at today's prices with today's technology.

Eric Reguly: Both figures are correct. The 175-billion barrel figure is the amount of oil the Alberta Energy and Utilities Board estimates can be recovered at the current prices using the current technology.

If the price rises and the technology improves, the figure could get much bigger.

The 1.7-trillion figure refers to the total resource, most of which is not recoverable at the current price and technology. Much of this guck is buried hundreds of meters underground.

Mark Rundle, New York: Canada has been talking about reducing GHG emissions for 10 years and has made no progress.

Given the gulf between Alberta and the rest of the country on this issue, the stage appears to be set for another 10 years of talk and debate, with no action.

What do you think is the risk that the rest of the world will lose its patience with Canada and pull out some sticks (i.e., trade measures) to force the change that Canada cannot seem to make on its own?

And to what extent do you believe decision-makers are aware of this risk and the broader ill effects that Canada's behaviour on climate change is having on its international reputation?

Shawn McCarthy: Hi, Mark. The impasse you spoke of is real and could cause major problems down the road if the federal government tries to impose environmental constraints on development over Alberta's objections.

At the moment, the Harper government has said its climate-change policy will be consistent with Alberta's.

But the two governments have published hugely different targets for emission reductions and it is hard to see how Ottawa can achieve its more ambitious targets without forcing the oil sands developers to more aggressively address CO2 emissions.

Decision-makers in Canada are worried about the apparent increase in climate change action in the U.S. In fact, such pressure — if it materializes into real action — may eventually be the single most-important factor in forcing Canadian oil companies to invest in costly carbon reduction technology.

Erin Anderssen: Hi, Mark. Balancing the environmental impacts against the economic benefits is certainly going to be one of the most complicated issues facing the oil sands development.

In the last year, there has been an increasing amount of criticism from international environment groups specifically targeting the oil sands — that can only get louder as the development gets larger.

And Canada's performance in Bali didn't do much for our reputation.

The oil sands are already the largest contributor to the increase of greenhouse gases in the country. At current rates of development, without a technological solution, the country is going to have very hard time meeting its climate change commitments.

We are already seeing certain counter steps being taken — California will impose levies on oil from sources it consider to be dirty.

It is certainly reasonably to see more measures like this in the future.

But at the same time, the world's appetite for oil continues to increase, with the United States leading the way. And the oil sands will become a bigger player in feeding that appetite.

So slowing down development becomes a very difficult trade-off.

The oil sands is an easy target — and in many ways, a justified one. But it shouldn't become a scapegoat to distract us from other conservation measures — like improving gas mileage in vehicles — or developing alternative sources of energy.

Dave Belaney, Alberta: How did the oil sands become an economic force?

I think you hinted at the answer in your article without quite nailing it — by completing sacrificing environmental concerns.

My question is: If you factor in all the liabilities — GHG, tailings ponds that will poison the land for hundreds of years — is it really such a miracle? And why are these costs not accounted for by economists?

I guess I am one of those guilty and ashamed Albertans The Globe cited in its poll Saturday.

Erin Anderssen: Hi, Dave. I think you make a good point and I think you're right — the environmental liabilities have been underestimated.

In researching the history of the sands, it seems that so much effort and money went into figuring out how to get the oil out of the ground while turning a profit that the environmental and social consequences of the sudden boom have really taken everyone by surprise.

It's been largely assumed, from the start of the development, that new technology will resolve many of the environmental issues, and industry has made some advances.

But that optimism is likely overstated. There is no guarantee that's going to happen.

In fact, as a recent study by the Pembina Institute and the World Wildlife Fund pointed out, there's been a lot of inconsistency in ensuring that new technology is adopted by all projects.

Shawn McCarthy: Hi, Dave. It's true that the environmental liabilities have not been totally priced in, though the companies do face regulations on how they must handle most toxic wastes.

Economists don't factor in unregulated pollution because they are only liabilities if someone — the government — forces the companies to account for dealing with them.

Without a limit on carbon dioxide emissions, for example, companies can send all the CO2 into the atmosphere they want — free of charge.

William Hume, Edmonton: I first visited Fort McMurray more than 40 years ago. In that time, there have been tremendous advances in the technology applied to release the oil.

Environmental approval is now very rigorous with the most stringent standards and the application of best available technology made mandatory.

The energy intensity to create a barrel of oil has been reduced, as have the air emissions and in particular the sulphur emissions. The reclamation techniques have improved and significant areas have been returned to wildlife habitat.

Yet all we hear is the negative aspect. When will anyone ever cover a story on all the improvements that have been made?

Shawn McCarthy: William, we did say in our Saturday piece that both Suncor and Syncrude were successful at reducing their energy intensity — and therefore their greenhouse gas emissions — through technological improvements through the 1990s and beyond.

And while is true that the companies must meet environmental regulations, I think people are concerned that the sheer scope of the effort will overwhelm any standard that is out there.

If all the proposed projects proceed, the stresses on the land, water and air will be enormous and step-change improvements in technology cannot completely mitigate them.

Eric Caulfield, Brampton, Ont.: Why is Canada the only oil-exporting nation in the world to not have a "made-at-home special price" for its gasoline. Why do Canadians pay world prices for oil when we're self-sufficient in the stuff?

We have a agreement in NAFTA to sell our oil at world prices. Why?

What did Canadians get in return for this agreement? NAFTA was agreed to a long time ago before the oil sands were even considered black gold, so we must have received something in return to trade away our right to sell something for less.

Shawn McCarthy: Eric, you seem to blame the U.S. for the fact that Canada operates on a world price for crude oil.

I think that was a made-in-Canada decision carried out as Ottawa unwound the National Energy Program, which caused so much friction between Alberta and Central Canada.

Alberta's view is that a "made at home" price amounts to its citizens subsidizing the rest of the country and particularly Central Canadian manufacturers.

You don't hear much call for B.C. to sell its lumber at home for less than it could receive in other markets, or for Ontario-made cars to be sold at less-than-market prices.

Eric Reguly: Eric, you are right in noting that many countries — Russia, Iran, Venezuela, among others — have made-at-home prices. Those prices are as low as a few cents a litre.

But pricing a resource well below its true market value has created all sorts of problems in those countries.

Demand is soaring because gasoline is cheaper than water. Pollution and carbon dioxide ouput go up with it. There is no incentive for conservation or wise use of oil.

The cheap gasoline becomes entirely addictive, meaning that the governments dare not raise the price for fear of impoverishing its citizens.

If you want cheaper gasoline in Canada, vote for the candidates who promise to reduce energy taxes.

Melissa Dent, Sarnia, Ont.: How much water does it take to process one barrel of oil?

Shawn McCarthy: Melissa, the rough calculation, courtesy of the Pembina Institute, an environmental organization in Calgary, is that it takes two to four barrels of fresh water for every barrel of bitumen produced.

However, that's fresh water. The companies also recycle the water they draw from the Athabaska River for reuse.

Suncor says it has reduced its "water intensity" — barrel of water used for every barrel of oil produced — by 51 per cent between 2002 and 2006.

Eric Reguly: Way too much. My information (from the International Energy Agency in Paris) is that surface mining requires about 10 barrels of water for every barrel of oil produced and two barrels for evrey barrel produced from underground, or "in situ," recovery.

You have to be careful of the figures, though, because a lot of the water is recycled and advances in technology have allowed water use per-barrel to come down.

Tristram Shandy, London, Ont.: Are any of the writers of this article Albertans, or Westerners? It doesn't appear that they are from the brief bio's given, but I have not had time to do more research.

I am not trying to suggest that the perspective of Easterners is not valid, or that your writers will not do their best to learn as much as possible about the Western perspective on this.

It's just that the articles would be enhanced by having Westerners as contributors.

Eric Reguly: I can't speak for Erin. But Shawn and I spent the early parts of our careers at the now-defunct Alberta Report Magazine. In fact, I was its energy reporter in Calgary.

Shawn McCarthy: Tristam, no, I am not Albertan, but some of my best friends are. (haha)

I did do my undergraduate at the University of Alberta, and worked there early in my career — where I first met Eric Reguly — and I think I have some appreciation of the Alberta point of view.

We have also had our Calgary writers, Dave Ebner and Dawn Walton, participate in the series with articles on Saturday and again today.

Jim Sheppard: Erin, Shawn and Eric. Thanks again for joining us to take questions from our readers. I'm sure they appreciated your insight and analysis. Any last thoughts?

Eric Reguly: Writing from Italy, I just wanted to know if Fort McMurray has a decent pizzeria. Now that would be a way to make a fortune!

Thanks for all your smart questions.

Shawn McCarthy: Thanks very much for the excellent questions.

A project of this scale, to develop a commodity as central to our way of life as oil, in a federation as decentralized as Canada, just throws up a whole lot of vexing issues.

Five years into the boom, governments — and Canadians at large — have only begun to grapple with them.

Erin Anderssen: I just like to thank everyone for their questions.

Albertans — and Canadians as a whole — need to have a conversation about how both the province and the country are going to manage the issues around the oil sands development, to balance the benefits against the costs.

And as one of the oil industry experts pointed out in our story, there's no easy solution on the horizon.

But there's not much point in approaching the oil sands from only one angle at a time — the economic benefits, the social impacts or the environmental toll.

Those issues have to be managed in concert with one another, and that's the challenge ahead.