Providing coverage of Alaska and northern Canada's oil and gas industry
December 2006

Vol. 11, No. 53 Week of December 31, 2006

Failure to act could slow oil sands growth

Alberta Energy and Utilities Board calls for ‘coordinated action plan’ to cushion environmental, infrastructure impacts of growth

Gary Park

For Petroleum News

Alberta’s energy regulator has taken another chance to hammer home its message to governments that unless action is taken to handle oil sands growth development could be in trouble.

For the second time in two months, the Alberta Energy and Utilities Board called for “sustainable long-term solutions” to cushion the impact on the environment and community infrastructure in giving conditional approval to a C$12.8 billion expansion of Shell Canada’s Athabasca project.

A 124-page decision called for priority attention to the “need for a coordinated action plan and for accountabilities within that plan to assure the public that concrete action is being taken.”

Similar concerns were raised by the board in November when it approved a C$7 billion addition to Suncor Energy’s operation.

At that time, the regulator said there was only a “short window of opportunity” to provide the roads, health care, education and other infrastructure to accommodate rapid growth in the Fort McMurray region and prepare for a possible C$120 billion of projects over the next decade.

Stelmach puts services at top of agenda

The message has apparently been heard by the new Alberta government of Premier Ed Stelmach, who put the provision of services at the top of the agenda for his cabinet after his predecessor Ralph Klein publicly admitted his administration had no plan to handle the frantic rate of expansion.

The board, as part of a joint review with the Canadian government, said that if public infrastructure investments are “not made in parallel with continued oil sands development, socio-economic issues will become a critical part of the decision-making regarding oil sands applications.”

But the review panel rejected attempts to stall project approvals for Athabasca until services were in place to handle industry and population growth.

Conditions imposed

However, the regulators imposed an unusually long list of conditions.

It made 13 recommendations to the Canadian government dealing with water quantity, water quality and fish habitat and the need for coordinated measures to ensure the Wood Buffalo region of northeastern Alberta was able to service the anticipated level of growth.

There were 21 recommendations to the Alberta government urging coordinated action by all levels of government to ensure Wood Buffalo could service the anticipated level of growth.

In the process, the panel turned down a request by Albian Sands Energy, the Athabasca partnership, to relocate a road within the Athabasca River valley, to build a 200-foot-wide pipeline corridor and to build a 100-foot-wide corridor for a power grid connection.

It was not convinced that the applicant had shown the relocation of the highway would maintain the Athabasca River’s watershed, wildlife, recreation, ecological and traditional values.

Shell Canada still hopes to start work early in 2007 on the expansion, which is designed to boost production by 65 percent to 250,000 barrels per day and lay the groundwork for its eventual goal of 500,000 bpd.

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