Page 5 - NorthAmOil Week 04

NorthAmOil COMMENTARY NorthAmOil
megaproject would be a significant milestone after investment has fallen dramatically in recent years and many new developments have stalled. The industry’s woes were compounded by a number of international producers exiting the oil sands in recent years, while delays to planned new pipelines out of the region have also ham- pered growth by constraining takeaway capacity.
However, with some progress being made on both the Keystone XL and Trans Mountain expansion pipelines, it seems likely that these projects will eventually be built, though the pos- sibility of further delays remains. With the like- lihood of new takeaway capacity being available inthemediumtermincreasing,thoseproducers that have expansion plans can press ahead more confidently.
Frontier is estimated to cost C$20.6bn ($15.6bn) and would produce 260,000 barrels per day (bpd) of crude. It will be the largest oil sands mine in Alberta if it is built.
The project will consist of surface mining operations, a processing plant, tailings and water management facilities, and associated infra- structure and support facilities. On its website, Teck says it is committed to developing Fron- tier “responsibly, incorporating best practices for environmental protection, tailings man- agement, water use and managing greenhouse gases”. Indeed, Teck has pledged to build a power cogeneration facility and ensure that the emis- sions intensity of oil produced at Frontier would be half of the average barrel produced in the US.
More broadly, the company has a target to reduce its emissions by 450,000 tonnes per year (tpy) of CO2 by 2030. However, Frontier is esti- mated to generate 4.1mn tpy of new GHG emis- sions per year over a 41-year period.
The company has reached agreements with all 14 indigenous communities located within the broader Frontier project area, which will make it easier for construction to proceed if approval is granted. Opposition from First Nations living in the vicinity of new energy projects continues to
be a significant issue, and indeed concern over insufficient consultation with indigenous com- munities can lead to permits being rejected or revoked.
Up to 7,000 workers are expected to be directly employed during the construction of Frontier, with the project going on to employ up to 2,500 workers during operation. This point was emphasised by Alberta Minister of Envi- ronment Jason Nixon in a December letter to his federal counterpart, calling for the project’s approval to be expedited.
“Many Albertans are looking for positive signals from the federal government that the nationalinterestincludesAlberta,”Nixonwrote in his letter to Canadian Minister of Environ- ment Minister Jonathan Wilkinson.
What next?
Kenney said this week that Frontier had already been through years of rigorous environmental scrutiny, adding that it was now time for the pro- ject to be approved. But given how polarising any decision on the project will be, the possibility of a delay has been mooted.
“Cabinet can make a decision to approve, it can make a decision to reject, it can make a deci- sion to delay,” Wilkinson told media this week. “I’m not going to opine on what that decision is going to be,” he added.
Ministers have the power to ask for more information about the project, but this would require the deadline on the decision to be extended.
“Obviously this government has made com- mitments with respect to addressing greenhouse gas emissions and we would have to ensure that they fit within that context,” Wilkinson said.
These federal emissions targets appear to be the main stumbling block for Frontier. Whatever Ottawa decides will be met with opposition, but the decision will provide some clarity on what balancing Alberta’s interests with federal climate targets will mean in practice.™
If Frontier is rejected – or delayed further – Kenney and others are likely to view this as further proof that Ottawa is failing Alberta.
Frontier will be the largest oil sands mine in Alberta if it is built.
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