March 5, 2007

Joint panel grants conditional approval to Imperial's Kearl Oil Sands project

A joint review panel representing Environment Canada and the Alberta Energy and Utilities Board (EUB) has granted Imperial Oil Resources Ventures (Imperial Oil) conditional approval to build and operate the Kearl Oil Sands project (KOS). The Kearl project, a new development about approximately 70 kilometres north of Fort McMurray, includes the design, construction, operation, and reclamation of four open pit mines, ore preparation and bitumen extraction facilities, tailings management facilities and other supporting infrastructure.

The Joint Panel Report, EUB Decision 2007-013 places 17 conditions on Imperial Oil relating to environmental and technical aspects of the project, including tailings and reclamation management. In addition, the joint panel makes eight recommendations to the federal government concerning water management, fish habitat monitoring, mine fleet emissions technology, regional monitoring, and the Cumulative Environmental Management Association (CEMA).

Twenty more recommendations by the joint panel are directed to the Alberta government. These call for Alberta to:

*continue working with the Northern Lights Health Region (NLHR) to address the lack of land, infrastructure and resources in Fort McMurray that currently face the agency;

*take co-ordinated action to ensure that the Regional Municipality of Wood Buffalo (RMWB) has the ability to service the anticipated level of sustained growth in the region; and

*to continue working with the RMWB to ensure that the supply of land ready for residential development and the necessary planning is in place to meet the current and projected future housing demand in the region.

These recommendations reflect the joint panel's deep-seated concern about the socioeconomic impacts associated with the pace of oil sands development in northern Alberta. In granting its approval, the panel has deemed the project to be in the public interest and has determined that it will cause no significant adverse environmental impacts, provided proposed measures for mitigation are implemented, the panel's conditions and recommendations are followed, and Imperial Oil fulfills the commitments it has made over and above any regulatory requirements.

It is increasingly clear, however, that the critical issues surrounding oil sands development are not project-specific, says the report. They have largely to do with the current, rapid pace of development and the capacity of the regional environment to accept this development without incurring impacts that would render oil sands projects no longer in the public interest. The panel points out that two other recent project decisions have also indicated that these issues must be addressed with urgency if the current oil sands development pace is to continue.

Cumulative environmental impacts associated with oil sands development projects are another major concern of the joint panel. Its report calls attention to the uncertainties that exist because regional management frameworks and integrated end use planning are still not complete. These include items such as the Muskeg River watershed integrated management plan, the regional terrestrial and wildlife management framework and the Athabaska River water management framework (now completed--see following story).

The regional Sustainable Development Strategy, says the panel report, must include a work plan with clear priorities and schedules for completing these critical management frameworks. This could and should be done by the end of 2008, it adds.

The report commends the work of CEMA as vital in dealing with the issues surrounding cumulative environmental impacts, but expresses concern about the group's ability to carry out its mandate without enhanced support from regulatory agencies-who are, the panel points out, ultimately responsible for managing environmental effects in the region. Accordingly, it recommends that both Environment Canada and Alberta Environment take a more active and direct leadership role in all aspects of CEMA.

Another recommendation calls for both departments to work together to assess the need for a mine fleet emissions technology review and regulation development process.

Some of the conditions imposed by the approval on Imperial Oil include:

* submission of a mining and steam-assisted gravity drainage (SAGD) report to the EUB by the end of 2009, describing the effects of steam pressure on geotechnical factors of safety for external mine waste disposal facilities;

* a limit on annual average solvent losses from the tailings solvent recovery unit (TSRU) of no more than four volumes per 1,000 volumes of bitumen production;

* a prohibition on discharging untreated froth treatment tailings to the tailings disposal area;

* quarterly reporting on actual tailings performance, measured against planned performance; and

* annual reporting to the EUB on the company's research and development activities regarding end pit lakes (EPLs), large, post-closure voids that the company has indicated that would be inevitable parts of the landscape after mining. Those voids would accept runoff water from the reclaimed landscape and will help ensure that the proper bioremediation occurs, bringing contaminant levels to within acceptable levels. Various research organizations have been conducting work in this area for some 20 years.

The Kearl project is similar in design to existing oil sands mines in the Fort McMurray region, using large-scale shovels, trucks, crushers and oil sands hydrotransport technology. The current plan is to develop the mine in a staged manner, with an initial mine train with production capacity of about 100,000 barrels a day. Subsequent expansions could increase capacity to approximately 300,000 barrels a day.

The mine plan does not include any on-site bitumen upgrading. Any future upgrading capacity to support the Kearl project would be the subject of a separate application.

The Kearl Oil Sands Project is a joint venture between Imperial Oil Resources Ventures (70%) and ExxonMobil Canada Properties (30%), with Imperial as the designated operator of the project.

The Panel's final report (Joint Panel Report EUB Decision 2007-013) is available on the EUB Web site at www.eub.gov.ab.ca . A summary can be found on the Canadian Environmental Assessment Agency's Web site at www.ceaa-acee.gc.ca.

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