Ruling could snarl oil sands projects- March-2008

DAVID EBNER
From Thursday's Globe and Mail
March 5, 2008 at 7:32 PM EST
CALGARY — Oil sands projects could face tougher regulatory scrutiny after a federal court judge yesterday found the approval of Imperial Oil Ltd.'s $8-billion oil sands mine insufficient on climate change and greenhouse gas emissions.
A federal-Alberta review panel approved Imperial's Kearl mine last year, saying it was in the public interest, although it worried about “critical challenges” on environmental issues and local problems in Fort McMurray. Alta.
The panel didn't explain why it decided that 3.7 million tonnes of greenhouse gas emissions each year – equivalent of 800,000 cars on the road – wouldn't be significant, Federal Court of Canada Judge Danièle Tremblay-Lamer said in a judgment published yesterday.
“The panel dismissed as insignificant the greenhouse gas emissions without any rationale,” Judge Tremblay-Lamer wrote, calling on the panel to revisit the specific question.
The court victory by environmental groups, four of which had appealed the panel ruling, signals that the spotlight and assessment of oil sands projects will become ever-more intense.
While the decision focuses on the panel's decision to approve the mine rather than evidence presented by Imperial and its parent company, Exxon Mobil Corp. of Texas, it was hailed as a “landmark” in the oil sands by environmental groups.
Shawn Denstedt, a partner at law firm Osler Hoskin & Harcourt LLP in Calgary who works on many oil sands regulatory applications, said companies are ready to deal with tougher assessments. “The scrutiny of projects is becoming more and more stringent,” he said.
“This is another speed bump in the regulatory approval process, not a roadblock,” he said, adding that expected regulations on greenhouse gases from the federal government will provide further clarity.
Numerous large proposals are in the regulatory system right now, including major mines by Total SA of France, Anglo-Dutch Royal Dutch Shell PLC and Petro-Canada, as well as steam-injection projects by EnCana Corp. of Calgary.
The Federal Court judgment sided with Imperial on issues such as land management and endangered species, a win for industry, Mr. Denstedt said, but the spotlight on climate change and greenhouse gases is a challenge.
Imperial didn't return calls for comment. The Calgary-based company has said it plans to build a 300,000-barrel-a-day bitumen mine in three stages. Because of the court case and hyper-competition to build such projects, it hadn't yet decided whether to proceed.
Imperial has one month to initiate an appeal.
Sean Nixon, a lawyer at Ecojustice who represented the environmental groups, including Pembina Institute, said the decision's broader significance will be determined by what the regulatory review panel says in its amended approval.
Mr. Nixon also said it raises the question of whether reducing emissions per barrel, rather than cutting total greenhouse gases, is the right direction for governments in Canada to move.
“This will put some pressure on the federal and Alberta governments whether an intensity-based target is the right solution,” Mr. Nixon said.
Stephen Hazell, executive director of the Sierra Club Canada, said: “In effect, the Federal Court is saying that this hypocrisy has to stop.”