Alberta looks to shield oil sands lands

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Alberta will consider establishing new conservation areas on oil sands lands currently leased by energy companies, a provincial cabinet minister says.

The prospect of protecting privately owned land has already stirred much concern among industry, after an advisory board suggested protecting 32 per cent of the Lower Athabasca area, which contains much of the province's most lucrative bitumen deposits.

Though many companies believe the government would be unlikely to interfere with its primary economic engine, Mel Knight, the minister of sustainable resource development, said in an interview Friday that he is open to protecting some areas that have already been purchased by industry.

"There are many conservation easements now in the province of Alberta that are on leases, and are on privately owned land," he said in an interview. "Do we do it? Yes. Would we continue to do that? Absolutely."

Companies own rights to 73 per cent of the land in the Lower Athabasca, the large swath of land that surrounds Fort McMurray and serves as the heart of Canada's oil sands industry.

Earlier this week, a provincial advisory council recommended protecting nearly a third of that land. The council produced maps that clearly show proposed conservation areas on top of lands now owned by a broad array of companies. Small parts of land owned by Athabasca Oil Sands Corp., Laricina Energy Ltd. and Connacher Oil and Gas Ltd. and others are affected.

That has caused industry to raise the alarm that protecting the environment could be bad for business. The biggest worry, said Connacher chief executive officer Richard Gusella, would be if government began taking land.

"Obviously our first concern would always be any suggestion - and I'm not sure there is one - of confiscation. That would be of considerable concern to anybody in the business."

The Canadian Association of Petroleum Producers is also warning that "land use changes present business risk to companies holding existing land rights in the region."

"CAPP does not believe that the recommendation to protect up to 32 per cent of the lands in the region strikes the right balance of environmental protection and economic opportunity," said president Dave Collyer.

Mr. Knight, however, said he is "not uncomfortable" with protecting 32 per cent of the land, although that would come with tradeoffs.

"We do have to reach a proper balance here," he said. "And we need to know that if you start looking at 32-per-cent conservation in that area, there's obviously going to have to be some compensation, because there will be disposition holders there."

The recommended conservation areas are merely advice and do not constitute official government policy. But they will form the basis of a series of consultations in coming weeks and months as the government, which is under fire for its hands-off approach to oil sands development, seeks to set aside areas for wildlife and wetlands.

Conservation areas could be structured to allow existing development to continue or they could allow drills to penetrate protected lands from adjacent areas, Mr. Knight said.

And there is some evidence that protecting the land would not bring inordinate pain. The Cumulative Environmental Management Association, a non-profit research group supported by both government and industry, has calculated that even if 40 per cent of the Lower Athabasca is conserved, industry will still be able to produce 8 million barrels per day, more than five times its current output.

Some landholders also say conservation and development can proceed side by side. Athabasca Oil Sands Corp. chief executive officer Sveinung Svarte said his company will not resist efforts to conserve parts of its land, provided they are not rich in bitumen.

"If we prove that they're not prospective, we have no problem with that," he said. "If there are no resources, why not preserve them?"