IHS CERA: Canadian oil sands regulations 'similar to Australia, Alaska'

The environmental regulatory system for Canadian oil sands is similar in rigor to mining and oil operations in South Australia and Alaska, according to a new report by analyst IHS CERA.

Assessing Environmental Regulation in the Canadian Oil Sands is the latest report from the IHS CERA Canadian oil sands dialogue, which aims at an objective analysis on the benefits, costs, and impacts of various choices associated with Canadian oil sands development.

“The report provides important context to the ongoing discussions about the development of Canadian oil sands,” said Jackie Forrest, director of the IHS CERA Canadian oil sands dialogue. “While this is not a comprehensive list of all aspects of environmental regulation, it provides an illustrative case study,” said Forrest, adding, “There are more similarities than differences between oil sands environmental regulation and that of its peers.”

IHS CERA said the southern Australia and Alaskan operations were determined to be suitable project-level peers to the oil sands because “their operations are similar in size and scope, and they have comparable governance, resource investment and development philosophies.”

Key similarities among the projects include:

Project-level regulation. The project approval, ongoing operations, and project closure phases of a project’s life—including the data required and process—were found to be similar for the Canadian oil sands and its peers. Similarities include the approval process, public consultation and outcomes during approvals, the use of inspections and enforcement, and requirements for environmental monitoring.

Data availability and transparency. When considering project approvals, reclamation financial security, enforcement and inspections data availability and transparency for oil sands were found to be comparable to others.

Consultation requirements during operations. Alaska and South Australia also have no formal requirements for oil and gas developments, though they are required for active mines. The oil sands regulatory system also has no formal requirements. However, in all three jurisdictions many operators voluntarily consult with local stakeholders on a regular basis.

Financial securities. All jurisdictions examined require financial securities for surface mining operations in case operators go bankrupt and cannot reclaim lands disturbed during the operation.

Project denials are rare. Because of ongoing vetting prior to submission, a common criticism of oil sands development is that projects are always approved. The report finds that project denials are also rare in South Australia and Alaska. One reason for few denials is that when a project developer discovers the regulator’s requirements cannot be met they typically either terminate the costly application process or change the project design to address the regulator’s concern.

Although many similarities were observed between Canada’s oil sands regulations and that of its peers, differences do exist, the report says.

In particular, the report does not make comparisons at the regional level as each jurisdiction has different growth outlooks.

“Oil sands are projected to grow rapidly, possibly doubling over the next decade while the growth outlooks for South Australia and Alaska are relatively modest,” IHS CERA said.

Key differences include:

Differences in process sequence. Lands leased for Canadian oil sands development are leased to industry prior to studying the environmental impacts or consulting the public. The process proceeds in the opposite order in Alaska, where an environmental impact assessment is conducted and stakeholders are consulted before lands are made available to resource developers with stipulations and conditions for the region as a whole. However, Alberta is currently in the process of establishing a regional plan that encompasses the oil sands development area. If the plan is approved, oil sands projects would be subject to regional conditions and stipulations similar to Alaska, the report notes.

Method for financial security differs. While all jurisdictions examined require financial securities for surface mining operations in case operators go bankrupt and cannot reclaim lands disturbed during the operation, the method for oil sands differs from the peer group in one aspect. For Alaska and South Australia, the financial securities are intended to cover all estimated reclamation costs. For oil sands, only part of the reclamation cost is paid by the funds in the government's financial security—the remainder of the cost is covered by the value of the resource (the bitumen available for recovery).

Contact Eric Watkins at hippalus@yahoo.com.

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