February 9, 2004

Detailed conditions attached to EUB approval of CNRL's Horizon oil sands project

The Alberta Energy and Utilities Board (EUB) has approved the $8-billion Horizon oil sands project proposed by Canadian Natural Resources Limited (CNRL, subject to 17 conditions set out in a final report on the proposal. The report, by a joint review panel representing the EUB and the Canadian Environmental Assessment Agency (the Agency), also contains conclusions and recommendations pursuant to the Canadian Environmental Assessment Act (CEAA) with respect to the environmental assessment of the project.

The review panel's approval under provincial legislation (Alberta's Energy Resources Conservation Act) stipulates conditions relating to mining operations, resource conservation, and tailings management. Conditions generally are requirements which add to or expand upon existing regulations and guidelines.

With respect to its CEAA mandate, the joint panel has concluded that the project is unlikely to result in significant adverse environmental effects, provided that its recommendations, along with mitigation measures proposed by CNRL, are implemented. The panel has also made recommendations intended to help the federal and provincial governments mitigate the project's environmental impacts.

CNRL's proposed Horizon project includes an oil sands mine, a bitumen extraction plant, a bitumen upgrader, and associated facilities to be built 70 kilometres (km) north of Fort McMurray and 30 km north of Fort McKay. The project is designed to produce approximately 37,000 cubic metres per day (232,800 barrels a day) of upgraded bitumen product. CNRL expects to begin construction this year and start initial production in 2007, with full production expected by 2011.

The joint review panel was set up last summer and held public hearings during September 2003 in Fort McMurray. These sessions drew participants representing CNRL and other oil sands developers, First Nations, Metis, and local aboriginal groups, local residents, non-government environmental groups, a local medical staff association, and representatives from both provincial and federal regulatory agencies. Most of the issues raised centred on the environmental impacts of the project and the socioeconomic impacts of rapid industrial development.

CNRL has made a number of commitments not specifically required by the EUB's regulations. These were taken into account in the panel's decision, and the EUB will expect the company to fulfill its commitments.

Among other conditions attached to its approval, the EUB requires CNRL to:

--submit detailed geotechnical designs for all external overburden disposal areas to the EUB for review/approval at least six months prior to field preparation;

--include in the project area a minimum setback of 250 metres from the edge of the wetted width of the Athabasca River during spring flow, excluding the water intake facility;

--limit diluent losses to tailings and the scheme to not more than 4.0 volumes per 1,000 volumes of bitumen production, on an annual average basis, unless it can satisfy the Board that a limit of 4.3 volumes per 1,000 volumes of bitumen production is appropriate;

--refrain from discharging any untreated froth treatment tailings to the tailings area;

--submit an annual progress report to the EUB, starting on or before February 28, 2005, summarizing research and development on solid tailings technologies as well as modifications to the existing tailings plan to ensure rapid progressive reclamation and to eliminate the need for long-term storage of fluid tailings; and

--report annually to the EUB on the results of the basal aquifer monitoring program at the lease boundary with Deer Creek Energy Limited (DCEL) by the end of February each year following start-up of mine depressurization activities.

In addition, the joint review panel has made recommendations to federal and provincial agencies, including Environment Canada (EC), the Department of Fisheries and Oceans (DFO), Health Canada (HC) and Alberta Environment (AENV). These recommendations call for the company to:

--gather additional hydrologic data and to verify the predictions of its hydrologic model;

--develop and implement a comprehensive surface water quality and sediment quality monitoring program;

--share monitoring results of its compensation lake with other stakeholders in the region;

--to develop and implement, in consultation with EC, a comprehensive fish monitoring program; and

--to conduct follow-up studies on potential impacts of fish tainting compounds from the project on relevant fish species.

The panel further proposes that DFO assess the need to integrate the findings of the Instream Flow Needs (IFN) subgroup of the Cumulative Environmental Management Association (CEMA) into its authorizations.

Recommendations directed to Alberta Environment advise the department to:

--invite interested stakeholders to participate in the process of assessing the need for a regional groundwater resource characterization initiative;

--consider the involvement of stakeholders, in particular EC, in the design and implementation of CNRL's groundwater monitoring program;

--require CNRL to gather additional hydrologic data and to verify predictions of its hydrologic model;

--require CNRL to monitor for the effects of acid deposition in regional water bodies; and

--limit long-term (quarter-year or annual average) sulfur dioxide emissions to levels that correspond with 99.2% sulfur recovery at full calendar-day production rates.

The report also recommends that CNRL be required by AENV's dam safety branch to include updated seepage modelling results, quaternary deposits mapping, groundwater monitoring plans, and mitigation measures as part of the external tailings area detailed design report. AENV, along with Alberta Sustainable Resource Development, should consider setting or developing performance measures for progressive reclamation, and should consider requiring CNRL to develop and initiate a program to facilitate wetlands restoration.

The panel's report (EUB Decision 2004-005) may be viewed on the EUB Web site, www.eub.gov.ab.ca, or on the Canadian Environmental Assessment Agency's Web site, www.ceaa-acee.gc.ca. More information is also available from Brenda Poole Bellows at the EUB, 403/297-7012, E-mail brenda.poolebellows@gov.ab.ca, or from Gordon Harris at the Canadian Environmental Assessment Agency, 819/953-5045, E-mail gordon.harris@ceaa-acee.gc.ca.

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