Day 6

As the deadline to approve a massive oilsands project approaches, its economic benefit is up in the air

Teck Resources' massive Frontier mine oilsands project in Alberta is projected to produce 260,000 barrels of bitumen per day. But as global oil prices fluctuate, investors are warning it may not be as profitable as once expected, says The Narwhal's Sharon Riley.

'If you look at some of their own documents ... they do not seem that confident,' says reporter Sharon Riley

Teck Resources' Frontier mine is a proposed oilsands mine to be built approximately 110 km north of Fort McMurray, Alta. It would produce 260,000 barrels of bitumen each day. (Jeff McIntosh/The Canadian Press)

As a massive oilsands project awaits approval from the federal government — and a heated debate continues over its environmental impacts — the company behind the project is unsure of its economic viability.

Teck Resources' massive Frontier mine, which would be built approximately 110 kilometres north of Fort McMurray, is estimated to produce 260,000 barrels of bitumen per day. At half the size of Edmonton, it would be the largest oilsands mine in Canada. 

But as global oil prices fluctuate, investors are warning it may not be as profitable as once expected, says Sharon Riley, a reporter for The Narwhal.

The federal government is expected to make a decision on the project in February. Alberta Premier Jason Kenney has urged the Trudeau government to move the project forward, saying "it would be a clear indication that there is no way forward for this country's largest natural resource," if rejected.

Riley has followed the project's development and spoke with Day 6 host Brent Bambury about its future.

Here is part of that conversation.

There was lots of passionate and contentious debate over the Trans Mountain pipeline expansion, but the Frontier mine proposal, so far anyway, has flown under the radar by comparison. This is a big project. Why is it still so obscure?

It's something that probably a lot of people in the environmental community are asking themselves right now as well. But one thing to keep in mind is that this was sort of seen as not really a possibility in a lot of people's minds. 

There was a new oilsands mine that opened last year called Fort Hills. It's majority owned by Suncor, but as a partial share, is owned by Teck Resources, which is the same company that is proposing the Frontier mine.

When that Suncor Fort Hills mine opened, there were a lot of headlines saying this was the last oilsands mine. We even had, at the time, Suncor's CEO Steve Williams saying it's unlikely there will be projects of this type of scale ever again built. 

Sharon Riley is an investigative journalist for the Narwhal. (Taylor Roades/The Narwhal)

So what about Teck Resources? If they have an interest in both projects, how confident are they that this project would be successful?

It's hard to say. I mean, if you look at some of their own documents, including their annual report which is widely available online, they do not seem that confident. 

They've put a lot of time and investment and money into this project, and the proposal's been going on since at least 2011. But in their annual report, they say there's uncertainty as to whether the project will ever be economically viable to go ahead with it. 

So even if this project is approved by the federal government, it's still widely unknown whether or not it will ever be built by Teck Resources.

The Alberta government, I would imagine, has no such ambivalence.

No, and that's where this project gets really interesting. Even though we don't know if the project will ever actually go ahead with being built, the decision is so political — I mean, it's a political hot potato, as people have been saying. 

On one hand, it stands for this continued support of Alberta's oil industry. Premier Jason Kenney has been painting this as an absolute strike against the oil industry if the federal government were to not give it the green light. 

But then we have the environmental community saying we need to take our climate commitment seriously. You can't continue to approve mines with such enormous emissions footprints and be taken seriously on the global climate stage.

Alberta Premier Jason Kenney has urged Ottawa to approve the Frontier mine project. (Adrian Wyld/The Canadian Press)

The mine will be near the Wood Buffalo National Park in Alberta. What would be the impact to that area if this project goes ahead?

There [are] a number of environmental impacts that were looked at by a joint review panel that did recommend the federal government approve this project. 

They listed several of what they called significant adverse environmental effects. That includes the permanent removal of 3,000 hectares of peat land. Peat land is extremely important, as a carbon sink. 

Nearly 45 per cent of the area that the project will take place in is wetlands, so those will be removed.

And ... nearly 3,000 hectares of old-growth forest would be removed for the mine to be built. So those are some sort of very tangible environmental effects that you could see with any large, open-pit mine.

But this joint committee that you mentioned that has given a green light to the project, it seems to me that that committee gives political cover to the federal government if they decide to go ahead with it. Can you tell me about the committee and why they decided what they decided?

The committee is appointed by the federal minister of Environment and Climate Change Canada, that's the federal component, as well as the Alberta Energy Regulator. It's a three-person panel. 

They went through and produced ... a 1,000-page report outlining all the different environmental impacts as well as the economic impacts. 

And in the end, they concluded that despite these significant adverse environmental impacts, the potential for the economic impact in Alberta and in the country was worth it.

This Q&A has been edited for length and clarity. To hear the full interview with Sharon Riley, download our podcast or click Listen above.


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