Oil patch split over proposal for partial moratorium
NORVAL SCOTT
February 25, 2008
CALGARY -- A business-led lobbying effort to create a partial moratorium on oil sands development in order to free up conservation land has divided Canada's major energy companies, while a government decision on the issue will likely be delayed until after next Monday's provincial election.
Major oil producers - led by Petro-Canada Corp., Suncor Inc., Husky Energy Ltd., Shell Canada and Imperial Oil - have for the first time called on Alberta to slow development in the Athabasca region.
The group, which also includes Devon Canada and ConocoPhillips Canada, signed a private letter last month calling for the province to suspend land lease sales until at least 2011 in three areas around Fort McMurray, saying any additional sales "would continue to reduce the available options for the establishment of new conservation areas."
The letter was also signed by Environment Canada and the Pembina Institute, a Calgary-based environmental group, and presented on behalf of the Cumulative Environmental Management Association, a group of 46 industry, government and aboriginal members working in the Regional Municipality of Wood Buffalo.
"Further granting of new surface and sub-surface rights would continue to reduce the available options for the establishment of new conservation areas that would serve to accomplish a balanced suite of regional outcomes," states the letter to the Alberta departments of Energy, Environment and Sustainable Resources Development, a copy of which was obtained by The Globe.
The request for a development freeze in some areas has been rejected by at least four major companies belonging to the group and operating in the oil sands. In a letter to CEMA, Canadian Natural Resources Ltd. said the recommendation had been drawn up in "haste" and that the company opposes any suspension on lease sales. EnCana Corp. also believes the proposals have a "lack of clarity," particularly over what lands would be banned from development in the future, spokesman Alan Boras said.
In its own letter to the association, UTS Energy Corp. said that while it supports the concept of protecting some areas from development, it is concerned that projects in adjoining areas could be hampered. A fourth group, comprised of OPTI Canada Inc. and Nexen Inc., also opposed the call for a partial moratorium.
According to documents obtained by The Globe and Mail, a clear majority of CEMA's members support or conditionally support the letter.
The Alberta energy regulator and Syncrude Canada, the largest oil sands producer, abstained from a vote on it.
The Alberta government is currently formulating its response, Alberta Energy spokesman Bob McManus said. He wouldn't indicate what that response might be, and denied suggestions that the timing of any response would be affected by the provincial election, saying the vote "has nothing to do with it.
"The leasing and licensing system has worked well for many, many years and is the cornerstone to Alberta's [oil sands] development," Mr. McManus said.
He added that while the lack of consensus behind the CEMA proposal is "a bit outside the normal course of business, it doesn't mean it won't be considered."
The CEMA letter recommends the government immediately halt selling new oil sands leases - licences that allow companies to find and produce crude - in three areas that have so far seen little development. One area is southeast near the Saskatchewan border, while the other two are south and east, respectively, of Wood Buffalo National Park.
In total, the regions cover approximately one-sixth of the Athabasca reserves, where the bulk of Alberta's oil sands production and development occurs.
CEMA's members have been working since 2005 to create a framework for land management that would define what land should and should not be used for oil sands development, and are to meet in June to vote on the final recommendations to be forwarded to government. However, a letter had to be sent early to prevent any more sales of land that the group believes should be environmentally protected, CEMA president Randall Barrett said.
"The concern was that if we didn't get the letter in, then land sales would continue to go ahead, and we needed to signal to the government that these areas should be set aside," Mr. Barrett said in an interview.
While CEMA has no position on the pace of development, the framework being created represents a "more reasonable and orderly approach toward development," he added.
Premier Ed Stelmach has consistently refused to "touch the brake" on oil sands development.
Since receiving the letter on Jan. 18, Alberta Energy has accepted nearly $18-million in proceeds from a Jan. 23 land sale, although it's not clear if any of the leases sold were in the areas designated by CEMA.
CEMA's Mr. Barrett said he had been in talks with government bodies over the letter. He expects to receive an official response within the next three weeks.
Gord Lambert, vice-president of sustainable development for Suncor, the second-largest producer in the oil sands, said the move "is really to indicate and highlight to the government that there are areas that are potential candidates for conservation and that they should be protected. Oil sands development can be done along with conserving habitats."
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