On one hand, on the other

Gary Park

for Petroleum News

The Alberta government is eager to attract as many new oil sands projects as there are proponents.

At the same time, it is ready to draw a line in those sands.

The separation of the province’s priorities has never caused as much confusion as it did in February.

The government’s Alberta Energy Regulator (AER) cleared a path for the sector’s dominant producer Suncor Energy to proceed with a new 40,000 barrels per day operation, allowing the company to start applying for environmental licenses and development permits.

That coincided with an order by the Court of Queen’s Bench for the government to decide within 10 days whether Prosper Petroleum, an oil sands startup, could go ahead with development of its 10,000 bpd operation - a ruling the province immediately appealed.

Suncor’s proposal, a joint venture with Chinese-controlled Nexen Energy is known as Meadow Creek West and is one of two in-situ proposals by the partnership.

The facility extracts raw bitumen by injecting steam, which heats and softens the viscous sands and pumps the deposits to the surface where it is converted into synthetic crude for later refining.

Suncor made its initial application in 2017, but, partly because of the sag in crude prices, will not make a final investment decision until 2023. For now it has not disclosed a cost estimate.

Energy Minister Sonya Savage said that enabling projects like Meadow Creek West “demonstrates our commitment to encouraging investment and creating good-paying jobs in our province.”

It also helped that Meadow Creek is too small to have attracted the attention of anti-oil sands activists and environmental opponents.

Rigel Oil Sands Project

But that dispute did not sway Justice Barb Romaine, who ruled that successive Alberta governments had dragged their feet on a decision, agreeing with arguments made by Prosper that Premier Jason Kenney has chastised the Canadian government for similar delays in oil industry projects.

She said Kenney had “characterized lesser delays on the much more complicated Trans Mountain (pipeline expansion) project as taking too long, even though that project required consultations with over 100 Indigenous groups as opposed to the three Prosper was required to consult with.”

Rigel was approved by the AER in mid-2018, since when the Alberta government has changed from a New Democratic Party administration to Kenney’s United Conservative Party.

Even allowing for that transition, Romaine said the Alberta cabinet takes an average four months to decide on a project application, three months short of the longest delay, compared with the 19months for Rigel.

She said Prosper had met three conditions for gaining a final government decision - making a compelling case; showing it would suffer irreparable harm if denied; and demonstrating that an injunction forcing the government’s hand was warranted.

Prosper Chief Executive Officer Brad Gardiner said his company has been through a “very slow, frustrating” regulatory process, but “at least” he derived hope from Romaine’s ruling that the company would gain a clear verdict, “positive or negative.”

Instead the Alberta Court of Appeal ordered an appeal hearing for April 27, compounding Gardiner’s frustrations. He estimated that even if Rigel gains an approval the delay will cost his company C$130,000 a day, having already invested C$65 million over seven years.

- GARY PARK