Alberta regulator approves oilsands expansion, has environmental concerns

CALGARY – Alberta’s energy regulator has recommended approval of Shell Canada’s plan to expand oilsands production even though it acknowledges the environmental impacts will likely be so severe and “irreversible” that new protected areas should be created to compensate for the damage.

A 413-page report contains an extensive list of recommendations and conditions for both governments and Shell (NYSE:RDS) and contains some of the most strongly worded language yet on the industry’s growing environmental toll.

“It is clear that critical issues about oilsands development are increasingly not project specific,” the report says.

“Many of the concerns and issues related to this proposal have to do with the pace of development of the mineable oilsands and the capacity of the regional environment to absorb these developments.”

It concludes the project would involve the permanent loss of thousands of hectares of wetlands, which would harm migratory birds, caribou and other wildlife and wipe out traditional plants used for generations. It says Shell’s plans for mitigation are unproven and warns some impacts would probably approach levels that the environment can’t support.

It concludes the effects of the development, which would allow Shell to increase its bitumen output by 50 per cent to 300,000 barrels a day, would be so heavy that they couldn’t be fixed. The only answer would be to set aside relatively undisturbed land, says the report.

“The panel believes the use of conservation offsets may be necessary.”

Previous attempts by the Alberta government to create protected areas in the oilsands area have been strongly opposed by industry.

In a brief statement, a Shell spokesman said the company welcomed the decision.

“We take the public’s interest in the project seriously,” wrote Stephen Doolan. “We are now reviewing the recommendations and proposed conditions attached to the approval.”

The report now goes to federal Environment Minister Peter Kent. A decision on whether to accept, reject or modify the report is expected from the federal cabinet within the next four months.

The Alberta government will ratify the report through an order in council.

The report has been a long time coming. The Jackpine expansion has been before regulators since 2007 and company officials say they have submitted over 18,000 pages of information and evidence.

Still, the panel expressed doubts about Shell’s environmental work.

“The panel concluded it could not rely on Shell’s assessment of the significance of the project and cumulative effects on terrestrial resources.”

The report contains 22 conditions that would be binding on Shell if it were accepted by Ottawa.

There are concerns over the company’s plans to cap tailings ponds with a layer of fresh water into so-called end-pit lakes. The panel requires Shell to conduct and release new research on such ponds, as well as alternatives to them.

There are also 88 non-binding recommendations that the panel asks the federal government to impose on Shell before final approval — the wrong approach, said Simon Dyer of the environmental think-tank Pembina Institute.

“We pleaded with the panel, ‘Please don’t make recommendations that will never be enforced,'” he said. “Either make them binding conditions or reject the project.”

Dyer pointed out previous projects with similar suggestions have been approved with no accountability as to whether they ever come into effect.

“The way to get accountability for fixing these policy gaps is to recommend not to approve the project until these recommendations have been met,” he said.

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