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

Vol. 11, No. 30 Week of July 23, 2006

Sands showdown

Mikisew Cree First Nation asks for halt to oil sands expansion; local governments concerned; Suncor says it must seize window

Gary Park

For Petroleum News

That might once have been a relatively benign regulatory hearing is taking on the appearance of a showdown, as Suncor Energy battles aboriginal and local government opposition to a C$7 billion expansion of its oil sands operation in northeastern Alberta.

The Regional Municipality of Wood Buffalo, which covers the sprawling jurisdiction, wants the project delayed pending an inquiry into socio-economic issues and the Mikisew Cree First Nation is pleading for a halt to industrialization of its land.

The Voyageur application, now before the Alberta Energy and Utilities Board, is part of Suncor’s multi-phase expansion, which is designed to push production to 500,000-550,000 barrels per day by 2010-2012 from the latest 263,000 bpd.

But the opening days of the hearing have shaped up as the toughest in oil sands memory.

Officials of the Mikisew even said their attempts to protect their environment and lifestyle from oil sands encroachment have resulted in threats that they could lose contracts with the industry and some loss of business.

Suncor insisted it has not been involved in issuing threats, assuring the Mikisew that their stance at the regulatory hearing will not affect the existing relationship.

“We’re not going to get intimidated by anybody who comes and threatens us,” Mikisew official Steve Courtoreille said outside the hearing.

“Our way of life and our environment is not a bargaining tool. We will not negotiate our way of life.”

Mikisew have received limited benefits

Mikisew industrial relations manager Melody Lepine said her community has obtained only “very minimal benefits” from its oil sands-related business — an airline serving the industry, an equipment manufacturing plant and a field services firm.

“We had no choice but to seek work because our way of life has been destroyed,” Courtoreille told the board, explaining why his community had become involved in the oil sands and had not opposed the C$10.8 billion Horizon project by Canadian Natural Resources.

Lepine said the Mikisew have “grave concerns” about the frenzied pace of oil sands development, saying “it should stop” because there is no assurance that the land will ever be reclaimed.

Wood Buffalo Mayor Melissa Blake said the Alberta government and the industry must gain a broader understanding of the impact they are having on the community.

She said the population of oil sands capital Fort McMurray has doubled to 75,000 in the past nine years and is adding that the prospect of another C$100 billion of projects over the next decade means Fort McMurray will need C$1.2 billion in infrastructure to handle growth.

No land yet fully restored

Pembina Institute Director Chris Severson-Baker told the hearing that the pace of oil sands expansion is getting ahead of Alberta’s ability to compensate for the resulting environmental impact.

He said that no land has been fully restored in 30 years of oil sands operations.

The Northern Light Health Region has called for a comprehensive socio-economic inquiry.

Faced with these demands, Suncor Vice President Terry Bachynski told the regulatory panel his company could lose hundreds of millions of dollars if Voyageur is delayed for even one year. He said there is already a line up to hire labor and buy materials such as steel. “You have a window. ... If you miss that, the opportunity is gone,” he said.

Suncor has also cautioned that stalling projects will result in fewer taxes and royalties to pay for new infrastructure.

Asked what advice he would have for candidates to succeed Alberta Premier Ralph Klein in December, Bachynski said they should “listen to the stakeholder. ... It’s a good industry that’s providing significant economic value to the province.”

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