Oil producers, Alberta seek streamlined review

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Canada's oil sands industry is working with the Alberta government on a controversial plan to pare down the environmental review process for one type of future oil sands projects.

The Canadian Association of Petroleum Producers, along with companies like EnCana Corp. and Alberta's environment ministry, are assembling a "streamlined" process for steam-assisted gravity drainage, or SAGD, extraction projects in the province.

Industry hopes the government will do away with long environmental impact assessments - which can take up to five years to complete - for most SAGD projects. If that happens, new SAGD projects will no longer have to do the baseline flora and fauna studies required under current legislation, and could be approved in as little as 12 months. That would dramatically speed the ability of companies like EnCana, ConocoPhillips Co. and Total SA to bring forward new projects.

It's an idea that environmentalists oppose, although even many oil sands critics say the current regulatory system is flawed.

Unlike the enormous open-pit mines operated by Suncor Energy Inc. , Royal Dutch Shell PLC and Syncrude Canada Ltd., SAGD operators don't dig up earth to extract crude from the oily ground around Fort McMurray. Instead, they inject huge volumes of high-pressure steam into bitumen-bearing rock. The steam melts out the bitumen, which is then collected and brought to the surface with horizontal wells.

SAGD produces more greenhouse emissions than mining, but creates less surface disturbance (although environmentalists have pointed out that it still fragments eco-systems). SAGD projects also rely primarily on brackish, non-potable water to power their operations. Mines typically pump fresh river water.

Companies like EnCana, which recently produced its 100-millionth barrel using SAGD, have been using this logic to push for an easier trip through regulatory applications.

"So far, the in situ [SAGD]projects have gone through the same process as the mining projects. And the mining projects - in terms of the disturbance and the water usage form rivers - they've had to go through a lot of scrutiny to get their approvals," said Harbir Chhina, vice-president of upstream operations for EnCana.

"We are working with the regulatory folks to streamline that. … I'm hoping by some time next year that we'll be able to streamline the approvals for these projects."

Mr. Chhina declined to specify what precise exemptions industry is seeking.

EnCana currently produces 100,000 barrels per day from SAGD, but hopes to quadruple that by 2017.

But giving SAGD operators their own route through the regulatory process is a bad idea, since both extraction methods are environmentally damaging, said Simon Dyer, oil sands program director with the Pembina Institute.

"We know that, for instance, woodland caribou in north-eastern Alberta are being extirpated, and part of that is a result of [SAGD]development within their ranges," he said. "There are major concerns about the disposal of both wastewater from SAGD and the cumulative use of water by the [SAGD]industry."

Mr. Dyer believes the current Alberta regulatory system is not working effectively, a view he shares with industry, who say it has slowed down tremendously in the past half-decade.

But, he said, fixing it requires not just streamlining for the sake of speeding approvals, but rather completely reworking the system so that it approves projects on a regional, rather than individual basis. That could then have the effect of speeding up approvals of projects that match with what the province wants to see.

"If we were to determine how many [SAGD]projects this landscape can handle concurrently, then that could actually make the approval process more routine," he said. "But we're missing that regional context."