The Alberta Energy Regulator has conditionally approved Athabasca Oil Corp.’s Dover oil sands project in northern Alberta, paving the way for the company’s Chinese partner to exercise an option to take full control of the venture for $1.3-billion.
The regulator said on Tuesday that the steam-assisted oil sands development project can proceed if the operating company, now owned by Athabasca and PetroChina Co. Ltd., meets 10 conditions regarding such environmental aspects as emissions control and leak detection.
The Fort McKay First Nation had opposed the development, arguing the project required a 20-kilometre buffer zone to prevent encroachment on traditional hunting grounds. It also expressed concern that the development would contribute to the overall effects of rapid development of oil sands throughout the region. Its intervention in the process triggered a hearing last spring.
However, the AER panel ruled that excluding reserves from development as part of a buffer zone would be economically detrimental to the province and municipality and not in the public interest.
The project is designed to eventually produce 250,000 barrels a day of bitumen.
In 2010, PetroChina bought 60 per cent of both Athabasca’s Dover and McKay River projects for $1.9-billion. The agreement had a put/call option, allowing either side to trigger the sale of the remaining 40 per cent to PetroChina, following regulatory approvals.
Athabasca has been counting on the $1.3-billion it would receive in proceeds from its Dover stake to fund other parts of its business. Its shares have risen this month in anticipation of the green light for the project.
The deal expected to result in PetroChina taking over the Dover project was signed before Ottawa brought in new restrictions on foreign investment in Canada’s oil sands.