"While this is not a comprehensive list of all aspects of environmental regulation, it provides an illustrative case study. What we found was, for the specific examples we compared, there are more similarities than differences between oil sands environmental regulation and that of its peers."
The environmental regulatory system for Canadian oil sands is similar in rigor to that of its peers, according to a new case study by IHS CERA. The report assesses the project-level environmental regulatory system for oil sands compared to South Australian Mining and Alaskan mining and oil operations.
The Southern Australia and Alaskan operations were
determined to be suitable project-level peers to the oil
sands because their operations are similar in size and
scope, and they have comparable governance, resource
investment and development philosophies. Given the
different growth outlooks for the jurisdictions (oil sands
are projected to grow rapidly, possibly doubling over the
next decade while the growth outlooks for South Austrailia
and Alaska are relatively modest) regional requirements are
not directly comparable, thus the report does not make
comparisons at the regional level.
"The report provides important context to the ongoing
discussions about the development of Canadian oil sands,"
said Jackie Forrest, director of the IHS CERA Canadian oil
sands dialogue. "While this is not a comprehensive list of
all aspects of environmental regulation, it provides an
illustrative case study. What we found was, for the
specific examples we compared, there are more similarities
than differences between oil sands environmental regulation
and that of its peers."
Among the similarities found:
- Project-level regulation - The project approval,
ongoing operations and project closure phases of a
project's life-including the data required and
process-were found to be similar for the Canadian oil
sands and its peers. Similarities include the approval
process, public consultation and outcomes during
approvals, the use of inspections and enforcement, and
requirements for environmental monitoring.
- Data availability and transparency
-When considering project approvals, reclamation
financial security, enforcement and inspections data
availability and transparency for oil sands were found to
be comparable to others.
-
Consultation requirements during operations -
Alaska and South Australia also have no formal
requirements for oil and gas developments, though they
are required for active mines. The oil sands regulatory
system also has no formal requirements. However, in all
three jurisdictions many operators voluntarily consult
with local stakeholders on a regular basis.
- Financial securities - All
jurisdictions examined require financial securities for
surface mining operations in case operators go bankrupt
and cannot reclaim lands disturbed during the
operation.
- Project denials are rare - Because of on-going vetting prior to submission, a common criticism of oil sands development is that projects are always approved. The report finds that project denials are also rare in South Australia and Alaska. One reason for few denials is that when a project developer discovers the regulator's requirements cannot be met they typically either terminate the costly application process or change the project design to address the regulator's concern.
Although many similarities were observed between oil
sands regulations and that of its peers, differences do
exist, the report says.
-
Differences in process sequence - Lands leased for
Canadian oil sands development are leased to industry
prior to studying the environmental impacts or consulting
the public. The process proceeds in the opposite order in
Alaska, where an environmental impact assessment is
conducted and stakeholders are consulted before lands are
made available to resource developers with stipulations
and conditions for the region as a whole. However,
Alberta is currently in the process of establishing a
regional plan that encompasses the oil sands development
area. If the plan is approved, oil sands projects would
be subject to regional conditions and stipulations
similar to Alaska, the report notes.
- Method for financial security differs. While all jurisdictions examined require financial securities for surface mining operations in case operators go bankrupt and cannot reclaim lands disturbed during the operation, the method for oil sands differs from the peer group in one aspect. For Alaska and South Australia, the financial securities are intended to cover all estimated reclamation costs. For oil sands, only part of the reclamation cost is paid by the funds in the government's financial security-the remainder of the cost is covered by the value of the resource (the bitumen available for recovery).
The report, Assessing Environmental Regulation in the Canadian Oil Sands is the latest report from the IHS CERA Canadian Oil Sands Dialogue, which brings together a wide variety of stakeholders to participate in an objective analysis and open exchange on the benefits, costs, and impacts of various choices associated with Canadian oil sands development. The dialogue addresses a range of topics that have the potential to shape the future growth of oil sands.
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