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The Athabasca River, down stream from many oilsands projectsJeff McIntosh/The Canadian Press

The Alberta government has trimmed how much land it plans to seize from oil sands operators, but will still pull companies out of an area half the size of PEI as it seeks to conserve land in an area thick with heavy industrial development.

Three years in the making, the province on Wednesday released a lower Athabasca regional plan that will protect 1.6 million hectares of land in northeastern Alberta, the largest single move to protect Alberta's habitat since the 1920s.

That includes 341,000 hectares of land already snapped up by oil and gas companies, which paid a total of $29-million to gain access to land potentially prospective for oil. Those companies will now negotiate with Alberta for compensation as the province cancels their leases.

"Our plan is bold, our plan is comprehensive," Alberta Environment Minister Diana McQueen said, while emphasizing that it "supports economic growth and certainty for industry."

The new conservation and recreation areas are porous, closing access to oil sands, but allowing development of so-called "conventional" oil and gas resources to continue – although no new land will be allocated for that purpose. And the protected land strategy marks a significant concession to industry for the province, which had initially released a plan that would have seen it convert 31,000 more hectares – and more lucrative parcels – into parks and conservation areas. Oil sands companies protested against that move.

Critics have said the plan does not do enough to protect the area, nor the caribou that are its most threatened species. About 20 per cent of woodland caribou habitat in the 93,212-square-kilometre region will be protected.

Still, the land-use plan marks a major stride for a province seeking to maintain some natural value in a part of Canada that holds tremendous economic potential. The plan sets legally binding thresholds for air and water quality and gives Alberta the power to halt both new and existing development if those thresholds are at risk of being exceeded.

Similar ecosystem limits for groundwater and biodiversity are expected in coming years.

In total, the new measures will protect 22 per cent of the lower Athabasca area, up from 6 per cent currently inside the provincial park system. It also mandates a plan for urban development around Fort McMurray.

More broadly, it allows the government to monitor and enforce so-called "cumulative effects," which involves monitoring a broad region rather than individual industrial projects. Such a step has long been sought by environmental critics, who applauded a plan they said constitutes "progress."

Still, they pointed to gaps. The threshold for water monitoring, for example, doesn't include looking at levels of polycyclic aromatic hydrocarbons and other hydrocarbon compounds that are "major oil sands pollutants," said Simon Dyer, policy director at Alberta's Pembina Institute.

Alberta has also declined to place a hard cap on how much development can happen at once. Pembina has called for only 5 per cent of the region to be "available to oil sands development at any time." Industry, however, has fought any effort to regulate the pace and scale of work, saying it could hurt the investment climate in Alberta.

But, Mr. Dyer said, "there is some improvements in terms of what was tabled today over the status quo, and we're happy to acknowledge those."

Industry, too, is pleased with the plan. On the environmental threshold limits, for example, "for the most part we're well below" what has been proposed, said Dave Pryce, vice-president of operations at the Canadian Association of Petroleum Producers. He added that when the plan comes into force Sept. 1, industry hopes it will go some way to dispelling criticism of Alberta for being lax on environmental stewardship.

"By and large this is actually a good piece of work that strikes the balance, and that will speak to some of those social licence questions," he said.