Feuding over oil sands freeze

Gary Park

For Petroleum News

A document sitting in Alberta government offices for more than a month emerged less than a week from a provincial election March 3 — just the sort of timing to arouse public suspicions of a deliberate leak.

And why not, given the volatile contents?

At the core was a proposal by a multistakeholder group — made up of government, industry and aboriginal representatives — calling for a partial freeze on government lease sales in three environmentally sensitive pockets covering about 3,000 square miles of the 18,000 square miles in the Athabasca oil sands region.

In a sharp diversion from the customary business model, the letter from the Cumulative Environmental Management Association or CEMA showed a rift in the industry ranks.

Leading oil sands players Imperial Oil, Suncor Energy, Petro-Canada, Shell Canada, ConocoPhillips Canada and Devon Canada agreed there should be a moratorium until 2011, giving the government time to develop an overall land management plan.

EnCana thinks the call “lacks clarity”; Canadian Natural Resources said the proposal had been developed in “haste”; Long Lake project partners Nexen and OPTI Canada rejected the idea of a moratorium; and UTS Energy (a partner with Petro-Canada in the Fort Hills project) argued that if some land was pulled off the table, adjoining projects could be affected.

Syncrude Canada, the world’s largest producer of synthetic crude, abstained from even voting.

A spokesman for Suncor said the purpose of the letter, which emphasized protecting the boreal forest, is to make government aware that there are ways to allow oil sands development and conserve habitat at the same time.

The CEMA letter was endorsed by Environment Canada, a federal government department; the Alberta-based Pembina Institute, an environmental think-tank; and the three major aboriginal communities in Alberta.

Alberta Premier Ed Stelmach has doggedly refused to “touch the brake” and slow the rapid pace of oil sands expansion.

But, facing a tough fight to extend Conservative party rule beyond the current 37 years, he showed a change of heart Feb. 25 when he told reporters on the campaign trail that the “environment should take precedence over the economy.”

“The most important thing is balancing the growth (in the oil sands region) with environment,” he said.

But Stelmach said the government is still working on environmental reports on air, water and soil quality before deciding whether to continue issuing lease rights and is also waiting for CEMA to take a final vote in June on an overall land management framework.

CEMA said the moratorium on leases should be imposed immediately to protect the land it has identified.

Some sources within the industry have no problem setting aside those leases, which they believe are marginal at best.

Kevin Taft, leader of the Liberal party, argued the government is out of touch with an emerging public consensus — including a call by former premier Peter Lougheed for a phased-in approach to oil sands development — that the resource must be better managed.

“This is the biggest industrial development on the planet,” he said. “We need a plan.”