A method and system for producing steam for extraction of heavy bitumen including the steps of mixing carbon or hydrocarbon fuel. The fuel is crude oil, vacuum residue, asphaltin, petcoke or coal. The oxidation gas includes oxygen, oxygen enriched air or air-combustion of the mixture under high pressure and high temperature. The fuel is mixed with low quality contaminated water containing organics and inorganics. The liquid phase transferred to a gas phase includes steam and carbon dioxide, wherein solids are separated from the gas phase. The gas phase is mixed with saturated water to scrub the remaining solids and produce saturated steam. The solid rich water is recycled back for combustion. The saturated steam super-heated dry steam and gas mixture is send to an enhanced oil recovery facility for injection into an underground reservoir.