|
Panel backs Teck mine
Panel backs Teck mine
Joint ruling: despite environmental impact Frontier project in public interest Gary Park for Petroleum News
Those campaigning to close down the oil sands industry have collided head on with environmental approval of a C$20.6 billion project that will surpass in size the sector’s largest existing operations.
The Frontier oil sands mine by Teck Resources has been deemed by a review panel of the Canadian and Alberta governments to be in the public interest, setting a deadline of Feb. 28, 2020, for the Canadian government to decide whether the Vancouver-based company’s plans would cause significant adverse environmental impacts.
Total output from the Frontier mine in northeastern Alberta would be 260,000 barrels per day of bitumen from an open pit mine, easily surpassing the 194,000 bpd capacity of the Fort Hills mine in which Teck has a stake of 21.31%, along with operator Suncor Energy at 54.11% and France’s Total at 24.58%.
Teck aims to start producing bitumen in 2026, with the mine scheduled to last for 41 years.
Billions in taxes The review panel noted that over the lifespan Frontier would generate taxes of C$12 billion for the federal government and C$55 billion for Alberta, plus C$3.5 billion in municipal property taxes.
Teck estimates the project will emit 4.1 million metric tons of carbon dioxide a year, although the Pembina Institute environmental think-tank says Teck has underestimated that output by 2 million metric tons.
Teck claims the operation will have lower greenhouse gas emissions per barrel than about half the oil currently refined in the United States, partly because of a treatment process that will eliminate the need to upgrade raw bitumen into synthetic crude for refining.
The same technology is used at Fort Hills, Imperial Oil’s Kearl facility and Canadian Natural’s Athabasca project.
Economics questioned But a number of critics have questioned the economics of Frontier given the constant fluctuations in the price of Western Canada Select, a heavy blended crude, and the serious constraints on market access.
Kevin Birn, director of North American crude oil markets for IHS Markit, said late last year that looking at the short-term price of oil raises doubts about whether a new mine should even be sanctioned.
However, a Teck spokesman said given the project timing and “the future demand we see, we think Frontier is a strong project to move ahead.”
When the Alberta energy regulator redrew the boundaries of the surface mineable oil sands area 10 years ago Teck said that extended its Frontier deposits beyond any previously known resources.
Environmental impacts Opponents say the environmental effects include the destruction of wetland and old-growth forests and threats to vulnerable species such as lynx, caribou and one of Canada’s few remaining wild bison herds.
The review panel said that although “there will be significant adverse project and cumulative effects on certain environmental components and indigenous communities ... we consider these effects to be justified and that the Frontier project is in the public interest.”
The panel’s decision poses a new political challenge for the government of Prime Minister Justin Trudeau, which is caught between those who say it has failed to defend the Alberta-based industry and those who attack the green light issued to the Trans Mountain pipeline expansion as undermining Canada’s targets for carbon emissions.
Environment and Climate Change Canada, a federal agency, said it will consult with indigenous groups on the review panel’s report and invite comment on the potential conditions that could be attached by the Canadian government.
Teck has reached benefits agreements with key First Nations in the area, including two First Nations that have been critical of oil sands development.
| 