Shares of Athabasca Oil Corp. fell about 17 per cent from Monday's close following news reports on regulatory hearings for its Dover oil sands project northwest of Fort McMurray this week.
Asked by the Investment Industry Regulatory Organization of Canada (IIROC) to comment on the drop in shares, Athabasca Oil said it "may be related to recent newspaper articles about yesterday's commencement of the previously disclosed public hearing by the Energy Resources Conservation Board (ERCB) in Fort McMurray, Alberta, in respect of the Dover Commercial Oil Sands Project."
The news release said "Athabasca is not aware of any material information regarding the ERCB Dover Commercial Project hearing that is not otherwise publicly available. Athabasca's policy is not to comment on rumours or speculation and accordingly, it does not intend to comment further."
The stock price fell to $6.76 at midday Wednesday from Monday's close of $8.14. After the news release went out, the stock rallied to $7.31.
Oil sands projects have come under increasing scrutiny in recent years as local First Nations communities receive international attention for their concerns about the effects on the air, land and water. An ERCB hearing for the Dover oil sands venture, a partnership between Athabasca Oil and PetroChina Co. Ltd., began this week, spurred by an objection from the Fort McKay First Nation, whose members have argued one of the last remaining bits of relative wilderness in the area could be affected by the project.
The Dover steam-assisted gravity drainage project, which will be constructed over five phases and eventually produce 250,000 barrels of bitumen per day, is slated to open some time this year. However, the Fort McKay First Nation said in a statement it has requested that Athabasca Oil create a buffer area to protect the band's "traditional territory" for hunting and fishing around Namur Lake and the Gardiner Lakes – an area known locally as Moose Lake – about 100 kilometres northwest of Fort McMurray.
According to Alberta Environment, the northern edge of the Dover project borders the Birch Mountains Wildland Provincial Park and Fort McKay's Namur Lake First Nation Reserve. Fort McKay First Nation communications director Dayle Hyde said the First Nation is looking for a 20-kilometre buffer zone.
On Monday, Dover spokeswoman Kristi Baron didn't speak to details of the dispute but said the company has been in discussions with the First Nation for about a year, with no resolution. But she said there's no concern the hearings will affect timelines for the project.
"The intention of the hearing is to decide one way or the other," Ms. Baron said.
"We've been flexible enough with the timelines on our end that it's really not a worry."
PetroChina bought 60 per cent of Athabasca's Dover and MacKay River projects for $1.9-billion in 2010. The agreement has a put/call option, allowing either side to trigger the sale of the remaining 40 per cent of the Dover project to PetroChina following regulatory approvals. But on Monday, Ms. Baron said "right now, we as a company are really just focused on the hearing and finding resolution on that."
Ms. Hyde has said many Fort McKay community members are employed in the oil sands and the First Nation tries to be "good neighbours to development." However, she also has described how the community of 700 is already surrounded by massive developments. For instance, she said the glow from the nearby Syncrude Canada Ltd. and Suncor Energy Inc. projects already light up the night sky.