As we have reported on the blog, the bout of oilsands fever sweeping through northern Alberta shows no sign of slowing down. Last week there were a staggering $38 billion in deals.

This huge investment shows that skyrocketing construction costs are not dampening interest. “The size of the prize is very large, so everybody is going hell bent for leather,” argues Martin Molyneaux, managing director of institutional research with FirstEnergy Capital.

Shell Canada’s plan to spend up to $27 billion on Canada’s biggest oilsands upgrader, the $6.6 billion friendly takeover bid for Western Oil Sands by U.S. refiner Marathon Oil Corp., and a $4.4 billion regulatory strategy filed by Suncor Energy for the mining plan of its Voyageur South site all indicate the need to ensure a smooth development path for the tar-like bitumen.

“Securing that midstream upgrading and the downstream refining solution is going to be a challenge that all producers in the oilsands are going to have to overcome,” said oil and gas analyst Chris Feltin with Tristone Capital. “It’s one thing to have these oilsands assets, but it’s really important for these developers to have downstream solutions to handle the crude they produce.”

But what’s their solution to the ecological cost of extracting oil sands?