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Vol. 17, No. 46 Week of November 11, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

Oil sands crunch point: Will cumulative impact slow expansion

All of the conflicting forces at play in the Alberta oil sands have arrived at a pivotal junction — Shell Canada’s bid for regulatory approval of two projects that are designed to add 300,000 barrels per day to production from the region.

The test for a joint review panel of the Canadian Environmental Assessment Agency, CEAA, and Alberta’s Energy Resources Conservation Board, ERCB, is whether it agrees the time has come to slow the pace of oil sands growth.

The two applications were filed five years ago — a delay that has allowed oil sands opponents to assemble their resources, make their case in the court of public opinion and set the stage for hearings that will focus on the cumulative impact of oil sands development, an issue that has received little attention until now.

“The environmental impact assessment for (Shell’s Jackpine project) offers the clearest indications we’ve ever seen that the cumulative impacts are just too high to be considered responsible,” said Simon Dyer, policy director of the Alberta-based Pembina Institute, in a statement by groups which have formed The Oil Sands Environmental Coalition.

Shell (which is currently producing 205,000 bpd from the oil sands) and its Albian Partners, Chevron and Marathon Oil, are seeking approval to bring another 100,000 bpd into production in 2017 at their Jackpine Mine, doubling capacity since production came on-line at 100,000 bpd in late 2010.

Also before a joint review panel is an application for a 200,000 bpd facility at the Pierre River Mine, with startup scheduled for 2018.

Shell concedes the timing and development of the projects now hinges on a number of factors including the outcome of the regulatory process, market conditions, final project costs and economics and consultations with key stakeholders.

A spokesman for the company said the single environmental impact assessment for both projects is “intended to provide the broadest, most comprehensive and conservative assessment of Shell’s mineable oil sands development plans.”

The prospect of oil sands output growing to 5 million bpd by 2020 from the current 1.7 million bpd has galvanized critics and opponents, who have gained strength from papers filed by Shell at the request of the CEAA to give an accounting of how the environment in the oil sands region has changed since production started and what part the Jackpine Mine would play.

Written by consultants Golder and Associates, the document estimates that annual levels of sulfur dioxide are about 20 times what they would naturally be over an area from Fort McMurray to about 60 miles north, while nitrogen dioxide is estimates to be at least 10-fold greater than pre-development levels.

Randall Barrett, director of Alberta Environment’s northern region, said the projects were derived from models deliberately designed to overestimate emissions as a way to ensure caution.

“It shows us we have to be very diligent in how we are setting pollution controls for any plants in this area, because the computer models are predicting that we are getting close to or over some of the air quality levels,” he said.

Barrett said regulators use the models to decide what emission controls to impose on projects.

Impact of all development

Shell, included in 18,000 pages of documents, has also disclosed that the impact of all development projects in the region, including the Jackpine Mine, would result in a loss of 40 percent-60 percent of habitat for birds, 47 percent of habitat critical to woodland caribou, 39 percent of habitat used by wood bison and significant swaths of forest important to lynx, wolverine, moose, beaver and black bear.

Dyer said the numbers are “unprecedented and show we are getting closer and closer to an environmental tipping point. If everyone develops what they want to develop in the region it could be devastating.”

“It is time some tough choices were made when it comes to deciding which projects go forward and which should be held back,” he said.

A Shell spokesman said the assessments look drastic because they represent a the impact of all possible mining and logging activity in the region and assume that all pending applications will be approved, with all going into operation at the same time and all resulting in maximum habitat disturbance.

First Nation challenge

Also challenging the applications is the Athabasca Chipewyan First Nation, ACFN, which is downstream of the mines and has spent years voicing its concerns about the negative impact on habitat, wildlife and the human population of the oil sands industry, and a regional group of the Metis Nation of Alberta.

The ACFN argued before an Alberta court that the governments of Canada and Alberta had failed to meaningfully address the impacts of Shell’s proposed operations on the Native communities and was therefore a violation of treaty rights, but failed to obtain an injunction to stop the hearing process.

The ACFN, despite repeated pleas to the joint review panel, was also kept out of the hearings and is now filing an application with the Alberta Court of Appeal, citing a section of the Canadian Constitution which guarantees aboriginals and First Nations the right to fishing, logging and hunting in their traditional areas.

Faced with ever-increasing interventions in oil sands applications, the Alberta government will introduce a single-window oil and gas regulator next June to streamline the applications process.

Energy Minister Ken Hughes said the new regulator will be responsible for energy resource development from the initial application to reclamation, allowing the industry and landowners to build on Alberta’s commitment to the environment.

The new body will assume the functions of the ERCB and Alberta Environment and Sustainable Resource Development with respect to oil, oil sands, natural gas and coal development.

Hughes insisted the new regulator “will not compromise the environment for one second; rather, it will be responsible for administering statutes under a number of existing acts. It will have a broader enforcement toolbox to draw from and increased fines to levy for companies and individuals found in non-compliance.”

—Gary Park

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