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Time running out to build roads Alberta regulator warns government window closing to provide infrastructure, social services to accommodate oil sands rapid pace Gary Park For Petroleum News
The Alberta energy regulator came close earlier in November to stepping outside its mandated role and entering the political realm by telling its government master that there isn’t much time available to invest in the infrastructure needed to keep pace with the frantic pace of oil sands development.
In giving a green light to a C$7 billion expansion by Suncor Energy, the Alberta Energy and Utilities Board said there is only a “short window of opportunity” available to provide the roads and other services needed for a possible C$125 billion expansion of oil sands operations over the next decade.
“The responsible government agencies are aware of and are responding to a number of the socio-economic impacts,” the regulator said in an 85-page decision.
But it was emphatic that additional infrastructure investment is vital for the Regional Municipality of Wood Buffalo, which embraces a vast oil sands region and serves a population of about 80,000, including 65,000 in the “oil sands capital” of Fort McMurray.
Hearing most complex in oil sands history The Suncor hearing, which sets the stage for the company to double production to 500,000 barrels per day by 2012, was the longest and most complex in the history of oil sands projects.
For Suncor, the process included thousands of hours of consultation with local, regional and provincial stakeholders.
Interveners tried to persuade the board to impose a moratorium on future development until infrastructure and environmental concerns had been fully addressed.
The opponents were unhappy with the final ruling.
The Pembina Institute for Sustainable Development criticized the regulator for failing to tackle the greenhouse gas emissions the Voyageur project is expected to generate, accusing the board of relying too much on other agencies to deal with cumulative concerns.
A spokesman for the institute described the approval, with some technical and environmental conditions, as defending the status quo.
Action called for on three questions However, the board called for action to answer three key questions: The significance of socio-economic impacts of oil sands projects on the Wood Buffalo region, what action is needed to deal with those pressures and who could bear the costs.
It said the taxes and royalty regimes already in place ensure sufficient revenues for all levels of government to meet the demands.
Bob McManus, a spokesman for the Department of Energy, told Petroleum News the board stance is a clear signal for all stakeholders — governments, industry and special interest groups — to engage in a concerted effort to overcome the challenges.
He said an Oil Sands Ministerial Committee, drawn from various government departments, is expected to present a report by June 2007 on how to handle growth in a sustainable way.
McManus said the government is confident that the rapid rate of growth can be managed and sees no reason to consider delaying projects.
The board seemed to share that view, saying government agencies are responding to a number of socio-economic impacts which it believes can be kept at a “manageable level” through the Voyageur construction phase.
Municipal government would have welcomed public inquiry The Wood Buffalo municipal government said it would have welcomed the board calling for a public inquiry given that it is faced with spending C$804 million over the 2007-2011 period on infrastructure needs and increasing its own staff of 450 by 50 percent, and noting that it now has the highest per-capita debt of any Alberta city.
So far, the Alberta government has committed C$578 million in 2006-2009 for additional health care, facilities, schools and highways.
It has also freed up enough land for 4,500 new housing units, although Wood Buffalo forecasts that another 15,500 will be required by 2010 and estimates that 20,000 workers will be housed in temporary camps by 2009.
The board had no time to relax as it started hearing an application by Imperial Oil for the proposed C$5.5 billion first phase of the Kearl development, starting commercial production in 2010 at 100,000 bpd and moving in stages to 300,000 bpd.
The Pembina Institute wasted no time firing its first salvo, accusing Imperial of ignoring climate change concerns by failing to table a greenhouse gas management plan.
A spokesman estimated Kearl would pump out 3.7 million metric tons of emissions annually, making the project the largest source of greenhouse gases per barrel of oil produced.
Imperial countered that it is deploying the best available technology to lower its energy consumption and insisted that by managing energy efficiency it is making a contribution to lower emissions.
It said measures include using a low-temperature process to extract raw bitumen, while a high-efficiency, natural gas-fired plant will produce both electricity and steam for the operation.
Pembina wants the regulator to deny a development permit based on the forecast level of emissions.
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