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Canadian regulators apply squeeze Conditional approval for Shell Canada’s oil sands expansion suggests environmental damage likely to be severe and ‘irreversible’ Gary Park For Petroleum News
Shell Canada battled its way through strong opposition from First Nations and environmentalists to gain conditional regulatory approval for expansion of its Jackpine oil sands mine in Alberta to 300,000 barrels per day — only to encounter an unparalleled list of warnings about the project’s negative impacts.
The conclusions are also seen as possible pointers to another two controversial regulatory decisions involving the oil sands: Enbridge’s Northern Gateway pipeline to export 525,000 barrels per day of crude bitumen to Asia and Athabasca Oil Corp.’s 250,000 bpd Dover project, with Phoenix Holdings (wholly owned by PetroChina) as a 60 percent partner.
The 100,000 bpd addition to Jackpine covers an area of 25,000 acres and will wipe out a large chunk of wetlands, about 85 percent of which are peatlands that can never be reclaimed.
Lack of effective mitigation A joint review panel of the Alberta Energy Regulator Board and Environment Canada concluded that the addition would “likely have significant adverse environmental effects” on the wetlands, which would harm migratory birds, caribou and other wildlife and wipe out traditional plants used by First Nations for generations.
“There is also a lack of proposed mitigation measures that have been proven to be effective,” the JRP said.
In some of the bluntest language ever used in a regulatory report, a 413-page report by the JRP conceded the damage is likely to be severe and “irreversible.”
“It is clear that critical issues about oil sands development are increasingly not project specific,” the report said.
“Many of the concerns and issues related to this proposal have to do with the pace of development of the mineable oil sands and the capacity of the regional environment to absorb these developments.”
Simon Dyer, policy director at the Pembina Institute, an Alberta-based environmental think-tank, said Canada’s environmental reputation is being put further at risk as it keeps approving oil sands projects in the absence of adequate rules for global climate change or wetland protection.
“It’s the same old stuff,” he said.
Shell reviewing conclusions Shell Canada, which has Chevron and Marathon Oil as partners, said in a statement it was reviewing the JRP conclusions, which include 22 conditions, including conservation offsets.
“Since 2007, we have strived to improve the public’s understanding of the project through extensive consultation with people across the region and have submitted over 18,000 pages of information and evidence,” it said.
The company said it has bought about 1,800 acres of former cattle pasture in northwestern Alberta to help compensate for the loss of wetland.
A company spokesman, Stephen Doolan, said the regulatory green light does not mean Jackpine will be built.
“Right now our focus is on remaining competitive, economically and environmentally, and that means efficiencies through debottlenecking, or getting the most out of the steel you have in the ground,” he said.
The report now goes to the Alberta government and Canada’s Environment Minister Peter Kent.
A decision from the federal cabinet on whether to accept, reject or modify the JRP report is expected within four months.
The JRP Jackpine report is seen as the first project review to tackle the cumulative effects of oil sands development, while leaving the larger decisions on environmental concerns and questions about a social license to operate to government lawmakers.
First Nations issues The legal tussle with First Nations may not be over given the determination shown by the Athabasca Chipewyan First Nation, ACFN, in the northeastern corner of Alberta.
The ACFN made two unsuccessful bids in the Alberta Court of Appeal to block the expansion, then suffered the ultimate setback in the Supreme Court of Canada, which refused to consider whether the community had been adequately consulted.
ACFN Chief Allan Adam said “we have diligently proceeded through legal avenues to have our (constitutional) rights upheld.”
The ACFN has hinted it may mount another bid to block the regulatory ruling.
“We will have to decide if we move ahead with different legal strategies to uphold our rights,” Adam said.
Rights guaranteed The Canadian Constitution guarantees aboriginals and First Nations the right to fishing, logging and hunting in their traditional areas and the ACFN has argued that the Jackpine expansion would cause substantial loss of habitat for birds, woodland caribou, bison and elk.
The community also said that in its final stages the project would create a pit lake that could hold 486 billion liters of mine tailings waste, including mercury, lead and arsenic, while contributing 1.18 million metric tons of greenhouse gas emissions to the atmosphere.
Separate pipeline filing
Separately, a joint venture of TransCanada and the Dover partnership has filed a regulatory application for the first major pipeline from new oil sands projects west of the Athabasca River — the largest waterway through the oil sands region — targeting an in-service date of spring 2017.
The C$3 billion Grand Rapids project would consist of two parallel pipelines covering 300 miles and transporting 900,000 bpd of blended bitumen to the Edmonton market and delivering 330,000 bpd of diluents from Edmonton to the oil sands area to help with the pipeline transportation of the viscous bitumen.
In addition, Grand Rapids would include four tank farms with 350,000 barrels of capacity and 150,000 barrels of diluents capacity.
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