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Globe & Mail (Canada): Shell gets go-ahead on oil sands expansion

Panel reviewing $12.8-billion project hints future projects will face tougher hurdles

DAVID EBNER

CALGARY — Shell Canada Ltd.’s $12.8-billion oil sands expansion in northeastern Alberta was approved yesterday, but the panel that reviewed the project said governments don’t have “sustainable long-term solutions” to properly manage the region’s rapid growth.

The decision suggested future projects will face more difficult hurdles for approval as environmental and community challenges mount in and around Fort McMurray, 435 kilometres northeast of Edmonton, where about $100-billion of work is predicted over the next decade.

The panel, a joint effort of the federal government and the Alberta Energy and Utilities Board, ruled the Shell project is in the “public interest” but said there must be “priority attention to critical challenges” related to the environment and “acute” issues faced by the overheated economy in the Fort McMurray area and the regional health district. It issued 34 recommendations to the Alberta and federal governments to manage growth.

While this project has been considered in the public interest, growing demands and absence of sustainable long-term solutions must weigh more heavily in determining the public interest, the panel said in a summary of its 124-page decision.

 It is the second time in two months that a regulatory decision regarding the oil sands has called for more government action. In November, the Alberta energy regulator approved a Suncor Energy Inc. expansion but said the province has a “short window of opportunity” to invest in roads, health services and other infrastructure in the Fort McMurray region to keep up with unprecedented growth.

The oil sands, which just a decade ago was considered a fringe resource, could become one of the biggest crude oil-producing regions in the world, with output predicted to rise to about three million barrels a day by 2015 from roughly one million a day currently.

Ralph Klein, Alberta’s former premier, admitted this year his government had no plan to manage breakneck growth, and the new Premier, Ed Stelmach, has said one of his top priorities is to cope with it better.

Shell won approval to expand its Athabasca oil sands project to 270,000 barrels of bitumen a day from 150,000. The joint panel conducted public hearings in September, and placed 16 conditions on Shell, including a requirement that it submit reports that will require further approval on items such as tailings ponds, giant toxic lakes where waste from the production process is stored.

The panel rejected Shell’s request to realign 5.5 kilometres of Highway 63, which would have pushed the road into the Athabasca River Valley.

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