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Large trucks make their way at the Athabasca oil sands north of Fort McMurray, Alta.

Kevin Van Paassen/Kevin Van Paassen/The Globe and Mail

Canada's oil sands companies have put away only a fraction of the money they will need to clean up their mess around Fort McMurray, creating a potential taxpayer liability of over $10-billion, according to a new report by an environmental group.

Over the past 40 years, oil sands producers have contributed a total of $820-million to Alberta's Environmental Protection Security Fund, which is required by the province to contain sufficient cash, bonds and letters of credit to "cover the cost of reclamation in case the operator is unable to complete reclamation on the site."

But a lengthy analysis by the Pembina Institute, a sustainable energy research and advocacy group, has found that it will cost far more to return northeastern Alberta's open-pit mines and lakes of mine effluent to an "equivalent land capability," the provincially required standard for cleanup once extraction work has finished.

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Industry has an unfunded cleanup liability of $10-billon to $15-billion, equivalent to $4,300 to $6,300 per Alberta taxpayer, the group wrote in a report entitled "Toxic Liability: How Albertans could end up paying for oil sands mine reclamation," which was released Tuesday. In total, 686 square kilometres of land have been disturbed by mining, while mine effluent has been stored in lakes that now spread over 170 square kilometres.

Industry has already reclaimed 65 square kilometres of land; much of the remainder is involved in active mine operations. Companies are spending billions outside of the money held as a security to return mined lands to their natural state, and new technology is also helping to speed reclamation.

Yet by not collecting enough in security deposits, government has not properly shielded taxpayers from a potentially large burden," said Nathan Lemphers, the lead author of the report.

"We're requesting that the reclamation securities policies that Alberta has reflect the liabilities that are incurred on the ground," Mr. Lemphers said.

"It's just making sure that there's adequate safeguards in place. And there isn't, from my research."

The report is the latest attack on the environmental record of the oil sands industry, which has been criticized for its high energy use and contributions to local pollution. Another recent study contradicted claims by government and companies that the oil sands has had no impact on pollution levels in the Athabasca River, while Environment Canada recently published data showing that companies dump arsenic, heavy metals and other toxins into their effluent tailings ponds each year.

The Alberta government itself has spent years studying the reclamation security issue. It said Tuesday that it disputes the dollar value of the shortfall - although it did not have an alternative figure - but agrees that not enough has been put aside.

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"Do we have enough money in our current security program as a backstop? No. We know we need to have a more robust system in place," said Chris Bourdeau, spokesman for Alberta Environment.

A new policy is being drafted by the government, but Mr. Bourdeau held out little hope of quickly fixing the situation. The province wants "to ensure that industry has a system that doesn't necessarily come out and penalize them quickly by increasing a fund dramatically," he said.

Industry, however, argues that the Pembina numbers are misleading, since reclaiming land is an integral part of mining it.

"As the mining progresses, they pick up a shovel full of material. And when they're finished, they put it back in the same place," said Greg Stringham, vice-president of markets and oil sands for the Canadian Association of Petroleum Producers.

That in itself should serve as reassurance that a cleanup is happening, he said.

Besides, he argued, even a corporate bankruptcy shouldn't saddle taxpayers with a huge bill.

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"If there was a company that financially had difficulties, and the assets are still there, the government has the opportunity to take that over to sell," he said.

At the same time, however, oil sands companies have made great strides in speeding the cleanup of one of its most difficult challenges, a substance called "mature fine tailings." The product of oil sands mining, mature fine tailings are extremely fine clay particles suspended in water. The water cannot be released to the environment until the clay particles are removed, but in their natural state, those particles will remain suspended for decades.

In the past year, both Suncor Energy Inc. and Royal Dutch Shell PLC have unveiled new technologies that allow that process to be sped up to weeks. Those technologies could substantially diminish the amount of effluent that needs to be cleaned up, a point made by Suncor chief executive officer Rick George in an interview last week.

"I am extremely proud of our whole track record of continuous improvement on the environmental front," he said, pointing to the mature fine tailings advances, which the company calls its TRO technology.

"With our new TRO technology at Suncor, we're reclaiming ponds at a rapid rate," he said. The oil sands, he added, is "one of the most transforming industries in North America."

Suncor is flying dignitaries to its mine later this month to celebrate the reclamation of its first tailings pond.

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