Oilsands Growth Now Beyond Regulator's Ability to Assess Impacts

EDMONTON (CP) -- Somewhere in the bowels of the Alberta legislature, an unreleased document still warm from the printer carries Bill Newell's fondest hopes.

The manager of the municipality that includes boomtown Fort McMurray is past hoping the province's energy regulator will help his community deal with the price of oilsands mega-development.

Instead, he prays the report of the Oilsands Ministerial Strategy Committee will offer solutions to problems ranging from a deteriorating environment to the lack of housing for thousands of new workers.

''We're waiting on that,'' he says.

''They haven't shown us the report, but they've told us it's in.''

In 2006, Alberta's Energy and Utilities Board held weeks of public hearings on three megaprojects totalling nearly C$27 billion in oilsands development.

Rulings on two of those projects are in and a third is expected in February.

But after the Dec. 21 decision on Albian Sands Energy's [TSX:SHC] $7-billion Muskeg River project contained more recommendations for the provincial government than it did for the proponent, some say the effects of that kind of concentrated growth have ballooned beyond what the board is able to deal with.

Oilsands development, they say, has become a speeding car with a gas pedal and no brakes.

''The (board) is saying that it can't - or won't - make the call,'' said Chris Severson-Baker of the Pembina Institute, an environmental think-tank.

By any measure, 2006 was an extraordinary year for Alberta's energy industry.

The board received a record 60,125 applications, twice the number received five years ago.

While most were for small projects, three were for some of the largest the province has ever seen: along with Albian Sands, there was Suncor Energy's [TSX:SU; NYSE:SU] C$12.8-billion Voyageur expansion and Imperial Oil's [TSX:IMO; AMEX:IMO] C$7-billion Kearl proposal.

And at the hearings, the board heard evidence the like of which it had never heard before.

Fort McMurray Mayor Melissa Blake said her city simply couldn't house the thousands of new workers needed for such projects or promise them a community that was safe and functional.

The head of medical staff for the local health region said it has only half the number of doctors it needs and about one-third of what it will need by 2011.

Aboriginal groups worried that one mega-project after another would eventually drain the Athabasca River to the point of fisheries collapse.

Such broad social concerns are new to the board, said spokesman Davis Sheremata.

''Not only have the hearings been long and complex, the scope of them has been pretty vast as well.''

But when the board issued its decision on Voyageur in November, hopes that it might address broader concerns by slowing down development or forcing industry to help pay for some of the services its employees will require were dashed.

''The board appreciates that continued oilsands development has the potential to further strain public infrastructure and public service delivery,'' said the decision.

''The board believes that the responsible government agencies are aware of and are responding to a number of the socioeconomic impacts.''

It was, said Severson-Baker, ''demoralizing.''

''(The board) sort of dodged that public interest question. (It) recognized that there were all kinds of problems, but then pointed to other agencies to solve them.''

The Albian Sands ruling followed the same pattern.

''With growth pressures expected to continue, public-sector service providers in the region ... have stated that the region will not be able to provide the needed services to support the anticipated pace of growth without substantial additional support from the government of Alberta,'' the ruling said.

''The (panel) does not believe that the EUB has the mandate to resolve the socioeconomic issues raised in this proceeding; rather it believes that responsibility rests with appropriate government bodies that are in a position to provide direct assistance in these matters.''

The Kearl decision isn't likely to differ, said Severson-Baker.

''I'm not aware of anything fundamentally changing to address the concerns of the municipality at this stage,'' he said - although he added that the board did ask questions on how long a development pause might be required during the Kearl hearing.

''I still hold out hope for the Imperial decision,'' he said, pointing out that panel also had involvement from the federal environmental regulator.

Andre Plourde, an energy economist at the University of Alberta, said the board doesn't have the mandate to stop or even slow down development.

''It has to come from a policy decision from the government,'' he said.

''The government has been buying time for a while, knowing there will be a transition,'' said Plourde, referring to the replacement of former premier Ralph Klein by new Progressive Conservative Leader Ed Stelmach.

''This issue will have to be addressed in the next short while.

''What (the board) should be paying attention to is something that the government will have to decide. (The board) is looking for some direction.''

So far, said Severson-Baker, government has been part of the problem, racing the development engine through favourable royalty regimes and land sales.

''It just doesn't work to have Alberta Energy pouring on the gas and not having another agency empowered to put on the brakes if necessary,'' he said.

Stelmach's signals have been mixed. He's promised to review Alberta's energy royalty regime and to put affordable housing at the top of his agenda.

But at his first news conference after winning the leadership, he pooh-poohed the notion that government should regulate development.

''There's no such thing as touching the brake,'' he said.

Newell said a full public inquiry is needed to discuss the cumulative impacts of the oilsands industry, which now has over $100 billion worth of projects either approved or planned.

Such an inquiry, he said, is not likely to come from the board.

''They didn't believe it was within their mandate to call an inquiry,'' he says.

Hence, his hopeful glance toward the legislature and the ministerial report, now being circulated to members of Stelmach's newly appointed cabinet.

''We expect that industry should pay their share of the imposition on the quality of life of our inhabitants,'' said Newell.

It's time for government to say how much is too much, said Severson-Baker.

''We're getting to the point - especially in the oilsands but probably elsewhere in Alberta as well - where we can't really can't afford to have the EUB dodging that decision. If they're not prepared to make that decision, then their parent agency, Alberta Energy, needs to be more directly involved.''

(c) The Canadian Press 2006

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