PetroChina cleared for take off

An Alberta aboriginal community has ended a drawn-out dispute over development of an oil sands property, opening the door for PetroChina to take full control of the project.

The Dover in-situ proposal — operated by Brion Energy, a joint venture by Athabasca Oil Corp., AOC, and Phoenix Energy Holdings, a Canadian unit of PetroChina — is scheduled to produce 250,000 barrels per day, with first bitumen scheduled for 2016 from an initial phase of 50,000 bpd.

The breakthrough came Feb. 21 when the Fort McKay First Nation announced it had dropped a court appeal on constitutional grounds of a regulatory approval in August, although the details of the agreement were not disclosed.

In 2010, PetroChina bought 60 percent of the Dover project, along with a put/call option allowing either side to trigger the sale of the remaining 40 percent after regulatory approvals.

AOC wants proceeds of C$1.32 billion from the sale to finance its other operations, including a multi-phase development of its Hangingstone oil sands lease.

Next step approval order

The Alberta Energy Regulator approved the plans after rejecting a request from the Fort McKay community for a 20-kilometer no-development zone south of its land.

The regulator said the development would have “little, if any impact” on the Fort McKay land, but establishing an off-limits zone would have prevented the production of 1.4 billion barrels of bitumen.

Fort McKay claimed the AER had failed to consider its treaty rights and insisted the decision to abandon the court appeal still leaves the issue unresolved.

But Brion Chief Executive Officer Zhiming Li said his company is committed to developing its lease in an environmentally sound manner, along with delivering social and economic community to the Fort McKay people.

—Gary Park