Sunday, 7 August 2011

Wall Street Journal Report - Canada Readies New Plan for Monitoring Oil Sands- and Points to Another BioLargo Opportunity


OTTAWA—In an effort to clean up the international reputation of its oil sands, Canada's federal government said Thursday it will launch a new air- and water-monitoring program for the industry.

The plan marks a significant change to regulatory oversight of the oil sands, an industry that has boomed in recent years amid sky-high oil prices and the recognition of vast reserves of oil in the western province of Alberta. It comes as Alberta refines its own plan for a revamped monitoring program.

Alberta and Canadian federal officials have worked to clean up the oil-sand industry's image. That has especially been the case ahead of a pending decision by the U.S. State Department on a proposed expansion of TransCanada Corp.'s Keystone oil-sands pipeline.

Bloomberg News

A truck carries oil sands at a Syncrude Canada Ltd. mine in Fort McMurray, Alberta, last year.

The expansion would significantly increase Canada's export capacity of bitumen, the heavy crude that is extracted from oil sands, to the U.S. The State Department decision is due by the end of the year, after further environmental review.

Environmentalists and some politicians on both sides of the border have criticized the oil-sands industry on a number of fronts, including the use of extraction techniques more akin to strip mining than conventional drilling and the industry's relatively high carbon footprint. The death of more than 1,600 ducks in 2008 in an oil-sands mining waste pond increased attention on the industry. Since then environmental groups have alleged that heavy oil-sands crude is more likely to cause oil spills, though some pipeline-industry experts dispute that claim.

In a major turnabout late last year, Alberta's government said it would revamp its provincial air and water monitoring, after an independent study raised worry about air-borne contaminants from oil-sands production. Alberta disputed many of the conclusions of that study but agreed its monitoring could be better.

On Thursday, federal officials unveiled their own plan, which will include provincial cooperation and will cost 50 million Canadian dollars, or about US$53 million, a year. The program will be funded by the industry but administered by the government.

The new system, to be jointly designed by the federal and provincial governments, will replace a patchwork of separate monitoring programs in Alberta with one set of scientific standards to track the effects on water, air and soil from the oil-sands industry.

Canadian Environment Minister Peter Kent said he is hopeful the new monitoring plan will ease concerns over the industry in the U.S. and help convince the U.S. State Department to approve the expanded portion of TransCanada's pipeline, known as Keystone XL.

Mr. Kent said he believes the new program will ease fears about environmental practices in Canada's energy sector. "It will provide the facts and the science to defend the oil sands, which some abroad are threatening to boycott," he said.

Simon Dyer, policy director of Pembina Institute, an environmental think tank, said he welcomed an improved monitoring system but said it was a first step. "We need the monitoring to result in changes in how the oil-sands are managed," he said.

Write to Paul Vieira at paul.vieira@dowjones.com and Edward Welsch atedward.welsch@dowjones.com

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