Alberta Premier Jason Kenney’s cabinet can take as long as it sees fit to decide whether to approve a long-delayed oil sands project, the government’s lawyer said on Wednesday.
Prosper Petroleum Ltd. has taken the government to court in an attempt to get a judge to force the cabinet into ruling on whether its Rigel oil-sands project can go ahead. It says it faces financial hardship and may not survive after 19 months of waiting for a decision.
The company has not been given a reason for the delay, though part of the project sits on lands that a First Nation wants set aside for traditional use as part of a plan that also requires provincial approval.
In a court hearing, the government argued that it believes it is immune from such legal action, and even if it is not, the legislation governing such approvals gives it broad discretion on how long the cabinet can take to decide on whether a project can proceed. The Alberta Energy Regulator (AER) approved Prosper’s project in June, 2018, and it requires an order-in-council before the company can begin construction.
The legislation “doesn’t allow the court to read in a timeline unless the facts are so egregious in terms of bad faith, but the facts just don’t support that,” Government of Alberta lawyer Doreen Mueller said during the proceeding.
Ms. Mueller did not give specific reasons for the lengthy review, citing cabinet confidentiality. She told Alberta Court of Queen’s Bench Justice Barbara Romaine that the court could infer that it is because of the complexities of the case.
The Rigel project would produce 10,000 barrels a day near Moose Lake, about 65 kilometres northwest of Fort McMurray, Alta. Prosper has said it has tried several times to meet with the government to discuss the project and reasons for the delay but planned meetings were cancelled.
Justice Romaine said she would issue her ruling next Tuesday.
The project represents a dilemma for Mr. Kenney and his United Conservative Party government. Mr. Kenney has been unabashedly pro-development when it comes to energy projects. In recent weeks, he has warned of dire consequences in Alberta’s already frayed relationship with Ottawa should Prime Minister Justin Trudeau’s Liberal cabinet reject Teck Resources Ltd.'s $20.6-billion Frontier oil sands project.
Like Frontier, Prosper’s Rigel project has regulatory approval and is awaiting government sign-off.
“Take out Teck Frontier and put in Prosper Rigel, and you’ve got our frustration reflective of what Kenney is talking about with the federal government,” Rigel CEO Brad Gardiner said after the hearing. He said he is pleased, however, that his company will finally learn if it is closing on a decision.
At issue is a 10-kilometre buffer zone around Moose Lake that the Fort McKay First Nation wants set aside as part of a management plan for the region. The First Nation appealed the AER’s approval of the project, arguing the regulator should never have given Rigel the green light while the Moose Lake Access Management Plan was under discussion.
A crude oil processing unit that is part of the proposed Rigel project would sit within the buffer zone, and the company has said redesigning the project to move it would be prohibitively expensive and worsen the environmental impact.
Fort McKay is adamant that it is anything but antidevelopment. It is surrounded by oil sands developments. It operates numerous businesses that serve the industry and employ more than 1,400 people, generating $500-million in annual revenue. Chief Mel Grandjamb has said, however, that the Moose Lake area is one of the last places his people can hunt, trap and fish under treaty rights.
At the end of January, Fort McKay and the Alberta government agreed to work on finalizing the Moose Lake Management Plan over the next three months.
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