Months before it sold off parts of a multibillion-barrel crude deposit it now wants to make into a park, the Alberta government was urged by a group of major industry players to keep companies off that land.
In May, July and October of 2008, Sunshine Oilsands Ltd. bought parcels of land in the northwestern corner of the province's oil sands. The company subsequently discovered a large chunk of potentially recoverable oily bitumen in the area, which it calls "Harper," that measures up to 7.6 billion barrels.
But critics question why Sunshine bought Harper - and why the Alberta government sold it. Even the industry's most important voices, such as Suncor Energy Inc. and Imperial Oil Ltd., had called for the area to be placed off limits because it contains important habitat for woodland caribou, a threatened species. They also warned that ongoing court cases threaten potential oil sands development in other areas important for caribou.
The conservation dispute illustrates the tremendous difficulty Alberta has encountered in its rush to mollify critics that now include not only environmental groups but also governments in the U.S. and Europe.
Sunshine, a privately held company partly owned by Chinese interests, has been arguably hit hardest by the province's new plan to transform 20 per cent of the Lower Athabasca oil sands region into conservation and recreation areas. Of companies that have revealed how much of their holdings will be affected by the plan, Sunshine has reported the greatest acreage. And, as an early-stage company, it is more dependent on the value of exploration land.
Public records make clear that Sunshine bought at least some of that land after a clear warning the area was considered sensitive.
In a letter dated Jan. 11, 2008, the Cumulative Effects Management Agency recommended that Alberta ensure the Harper region was "limited to no sub-surface tenure of any kind." It asked for a three-year moratorium on lease sales in areas where large tracts of forest could be preserved. To emphasize the point, it included a map in its letter to the deputy ministers of Alberta Environment, Alberta Sustainable Resource Development and Alberta Energy. On the map, the Harper area is marked with a bright red circle.
The letter was supported by a broad swath of CEMA participants, including Suncor, Petro-Canada, Environment Canada and Husky Energy Ltd. Other major players, including ConocoPhillips, Devon Energy Corp., Imperial, Royal Dutch Shell PLC and Total SA, indicated conditional support.
It took the Alberta government more than two months to respond to the CEMA recommendation. Bob McManus, a spokesman with Alberta Energy, said the province took CEMA's urging "under advisement," but said it was then too early in the province's land planning process to freeze lease sales. That step wasn't taken until 2010.
In the meantime, lease sales continued unabated. The Harper lands were sold. Sunshine drilled the area and discovered what it calls a "significant bitumen resource."
Industry analysts have suggested the resource is marginal relative to the most productive areas around Fort McMurray. Sunshine, however, has "targeted a commercial project location on our lands in the proposed Birch River area," David Sealock, executive vice-president of corporate operations, said in an e-mail. The company is now negotiating with the government, and Alberta Energy Minister Ron Liepert "has stated that he will work with us," Mr. Sealock said.
But environmental critics, such as Pembina Institute policy director Simon Dyer, said that by selling the land, the Alberta government "created a problem that didn't need to happen."
And, Mr. Dyer warned, the problem could worsen if courts rule in favour of several legal challenges demanding oil sands companies be kept off lands important to caribou. The places Alberta wants to protect cover only 11 per cent of the region's caribou habitat. This summer, environmental and First Nations groups will ask, in federal court, for an emergency protection order banning "further industrial activity" in the entire northeastern Alberta caribou range.
Ottawa has argued that such an order is not needed because the evidence doesn't warrant it - in other words, that the caribou do not need the protection; an Edmonton courtroom will hear arguments June 22. There is little doubt, however, that environmental groups are working to create legal uncertainty over an area far larger than that included in Alberta's own protection plan.
"What we are requesting is going to impact industrial development, specifically oil sands," said Melissa Gorrie, a staff lawyer with Ecojustice, a registered environmental charity. "A lot of caribou habitat overlies areas where oil sands development is or is going to be occurring."
Nathan VanderKlippe