Canadians asked to weigh in on new open-pit oilsands mine
Prospect of another big oilsands mine in Alberta raises issues of growth and cap on emissions
This story was originally published Sept. 8.
A proposal to build a new oilsands open-pit mine called the Frontier Mine, the kind of project that once provoked environmental activists to nickname Alberta's oilsands as "Canada's Mordor," is taking comments and heading to a public hearing in the coming months.
It may seem odd that amid Alberta's worst economic downturn in decades, where oilpatch investment has fallen by 70 per cent, that this very expensive project is under consideration.
But Teck Resources, which owns the project, has sunk enough time and money into Frontier that it is pushing ahead with the regulatory approval and will decide whether to build at a later date.
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It is the biggest project under review by the Alberta Energy Regulator and the Canadian Environment Assessment Agency and the first major opportunity for Alberta's NDP government and the federal Liberal government to make a key decision on oilsands development and Canada's climate change targets.
The proposed Frontier mine is located 110 kilometres north of Fort McMurray, around 40 kilometres from the Fort McKay First Nation's reserve. It is expected to cost upward of $20 billion and construction could start as soon as 2019, with first oil coming in 2026.
Or it could never happen.
Drastic recovery in oil prices needed
It is generally accepted that oil prices would have to recover dramatically, possibly back to triple digits, before Frontier would be considered economically viable.
"Frontier is a good name for it, because it's really on the frontier of oilsands mining, said Rob Mark, chairman of investment policy at investment firm 3Macs.
"It only makes sense with very high oil prices, but the regulatory process is long and at least you can warehouse it as a potential project if oil prices spike up again."
In the meantime, there's a policy decision to be made as to whether this project is good for Alberta and Canada.
According to Teck, the project would employ up to 4,000 workers during construction and up to 2,500 workers during operation. Even if the first of those jobs wouldn't be created for at least three years, it's a hard argument to ignore in Alberta these days.
On the flip side, there are the cumulative effects on the water, air, wildlife and, importantly, the communities around Alberta's oilsands. There are already oilsands projects everywhere in the area — will this one be the straw that breaks the camel's back?
Mine doesn't fit into oilsands emissions cap
There aren't hard limits on cumulative effects of oilsands development, but there are hard limits associated with the greenhouse gas emissions of the industry. In Alberta's climate change policy introduced in November 2015, oilsands emissions are not to exceed 100 megatonnes in any year.
Those oilsands emissions are currently at 70 megatonnes, and Dyer said that there are already approvals in place for oilsands projects that will bring those emissions up to 130 megatonnes a year. That number can be reduced through technology and innovation, but there are questions about how to fit Frontier into that mix.
"With emissions under 70 now, there's room for growth, but clearly there is a gap in what companies want to produce and what Alberta's rules are," said Dyer.
Earlier in the summer, the provincial government struck a panel to look into how to implement Alberta's climate change plan. The panel included activist Tzeporah Berman, who once wielded the "Mordor" term, along with longtime oil player Dave Collyer, former head of the Canadian Association of Petroleum Producers, and Melody Lepine, director of industry and government relations for the Mikisew Cree Nation.
It is their job to figure out how to implement that oilsands emissions cap, but it is not clear if their work will be done in time for Frontier hearings. Jim Ellis, chief executive of the Alberta Energy Regulator, said he did not know if the cap would be considered in the decision to approve or decline the mine.
These hearings may not garner the attention that Energy East already has, but environmental groups will be watching the results closely.
Dyer said that the temperature has been lowered around oilsands issues in part because of Alberta's climate change plan, evidenced by the number of environmental groups on stage with government and industry when the plan was introduced.
"A big part of them being on that stage was the commitment that oilsands emissions wouldn't exceed 100 megatonnes," said Dyer.
"Proposing a very significant source of greenhouse gas pollution at a time when both Alberta and Canada have made a commitment to reduce emissions, we're very interested in how they are going to square the circle."