Market News

 April 16, 2007
Call for a New Oil Sands Tenure Regime

 Calgary, Canada -- The pace of resource extraction in Alberta's oil sands is exceeding the ability of regulators and land managers to understand or to prevent long-term and irreversible damage to the environment, argues a new report from The Pembina Institute.

According to Haste Makes Waste: The Need for a New Oil Sands Tenure Regime, this is reinforced by the current oil sands management regime in Alberta, which separates key parts of the decision-making process and absolves government and industry of responsibility for the long term cumulative environmental impacts of multiple projects.

The Pembina Institute argues that the existing tenure regime limits the government's ability to effectively manage development since it is not informed by land use plans; includes no credible environmental assessment; and provides no opportunity for public input or comment.

In Alberta there are approximately 3,224 oil sands lease agreements in place, totalling 49,973 square kilometres, an area greater in size than Vancouver Island. In total 149,000 km2 of boreal forest could be leased for oil sands - an area as large as the state of Florida.

The rapid pace of development has created an industrial juggernaut that affecting both the environment and the quality of life in nearby communities. Greenhouse gas emissions, water usage, and land degradation are the primary environmental issues facing the industry, and a lack of infrastructure in areas such as health care and water treatment are some of the social effects now being seen.

Three large oil sands projects have been granted regulatory approval within the past year: Imperial Oil's $7 billion Kearl Oil Sands Project, Suncor Energy Inc.'s Voyageur project and Albian Sands' Muskeg River venture. Aboriginal and environmental groups have urged the government to slow the pace of development to address issues such as water withdrawals from the Athabasca River, rising greenhouse gas emissions, and inadequate infrastructure.

The vast majority of Alberta's oil and gas resources are owned by the Crown and managed by the Alberta Government on behalf of Albertans. The government grants the right to extract and produce oil sands to private companies, collecting benefits for Albertans through royalties and taxes. In the oil sands region, the province manages 97% of mineral rights and 3% are privately owned.

The tenure regime for oil sands development in Alberta relies on oil sands companies to request rights in a certain location. The Department of Energy then conducts an internal review to determine if the oil sands rights are available, and if so, the request is passed to the Crown Mineral Disposition Review Committee (CMDRC) for recommendations.

Once the Department of Energy has decided whether to post the requested parcel and whether there are any access restrictions, it informs the company that requested the posting. The provincial government posts a Notice of Public Offering of the rights initiating a public bidding process.

Public offerings of oil sands rights are also called land sales. However, it is not actually a sale because the ownership is still held with the province. The public offering is listed for eight weeks. At the end of this period, the oil sands rights are leased to the highest bidder in exchange for payment.

The Pembina Institute argues for reform of the oil sands tenure regime, and provides the following recommendations:

  1. The Minister of Energy should impose a moratorium on granting future oil sands rights until the tenure regime is changed to reflect economic, environmental and social considerations.

  2. Land use planning for oil sands must be completed by the Ministries of Energy, Environment and Sustainable Resource Development before lifting the moratorium and issuing new oil sands rights.

  3. The Minister of Energy should adopt changes to the tenure regime to ensure that decisions include:
    • environmental assessment (including cumulative impacts) to determine if issuing these rights is consistent with specific environmental objectives for regional management
    • public notice and opportunities for public comment before tenure decisions are made
    • a public interest decision on whether to grant tenure, based on the information derived from an environmental assessment and public input
    • a review of current tenure requirements and inclusion of environmental terms and conditions when oil sands rights are granted.

Read the full report here.

Source: Pembina Institute .