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Environmental regulation and the Canadian oilsands

Hydrocarbon Engineering,

The environmental regulatory system for Canadian oilsands is similar in rigor to that of its peers, according to a new case study by IHS CERA. The report assesses the project level environmental regulatory system for oilsands compared to South Australian Mining and Alaskan mining and oil operations.

The Southern Australia and Alaskan operations were determined to be suitable project level peers to the oilsands because their operations are similar in size and scope, and they have comparable governance, resource investment and development philosophies. Given the different growth outlooks for the jurisdictions (oilsands are projected to grow rapidly, possibly doubling over the next decade while the growth outlooks for South Australia and Alaska are relatively modest) regional requirements are not directly comparable, thus the report does not make comparisons at the regional level.

‘The report provides important context to the ongoing discussions about the development of Canadian oilsands,’ said Jackie Forrest, director of the IHS CERA Canadian oilsands dialogue. ‘While this is not a comprehensive list of all aspects of environmental regulation, it provides an illustrative case study. What we found was, for the specific examples we compared, there are more similarities than differences between oilsands environmental regulation and that of its peers.’

Some similarities found

  • Project level regulation. The project approval, ongoing operations and project closure phases of a project’s life, including the data required and process, were found to be similar for the Canadian oilsands and its peers. Similarities include the approval process, public consultation and outcomes during approvals, the use of inspections and enforcement, and requirements for environmental monitoring.
  • Data availability and transparency. When considering project approvals, reclamation financial security, enforcement and inspections data availability and transparency for oilsands were found to be comparable to others.
  • Consultation requirements during operations. Alaska and South Australia also have no formal requirements for oil and gas developments, thought they are required for active mines. The oilsands regulatory system also has no formal requirements. However, in all three jurisdictions many operators voluntarily consult with local stakeholders on a regular basis.
  • Financial securities. All jurisdictions examined require financial securities for surface mining operations in case operators go bankrupt and cannot reclaim lands disturbed during the operation.
  • Project denials are rare. Because of on going vetting prior to submission, a common criticism of oilsands development is that projects are always approved. The report finds that project denials are also rare in South Australia and Alaska. One reason for few denials is that when a project developer discovers the regulator’s requirements cannot be met they typically either terminate the costly application process or change the project design to address the regulator’s concern.

Some differences

  • Differences in process sequence. Lands leased for Canadian oilsands development are leased to industry prior to studying the environmental impacts or consulting the public. The process proceeds in the opposite order in Alaska, where an environmental impact assessment is conducted and stakeholders are consulted before lands are made available to resource developers with stipulations and conditions for the region as a whole. However, Alberta is currently in the process of establishing a regional plan that encompasses the oilsands development area. If the plan is approved, oilsands projects would be subject to regional conditions and stipulations similar to Alaska, the report notes.
  • Method for financial security differs. While all jurisdictions examined require financial securities for surface mining operations in case operators go bankrupt and cannot reclaim lands disturbed during the operations, the method for oilsands differs from the peer group in one aspect. For Alaska and South Australia, the financial securities are intended to cover all estimated reclamation costs. For oilsands, only part of the reclamation cost is paid by the funds in the government’s financial security, the remainder of the cost is covered by the value of the resource (the bitumen available for recovery).

The report

The report, Assessing Environmental Regulation in the Canadian Oilsands is the latest report from the IHS CERA Canadian Oilsands Dialogue, which brings together a wide variety of stakeholders to participate in an objective analysis and open exchange on the benefits, costs and impacts of various choices associated with Canadian oilsands development. The dialogue addresses a range of topics that have the potential to shape the future growth of oilsands.

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