Regulation is deficient in Canada's oil sands: study

CALGARY, Alberta (Reuters) - Reclamation in Canada’s oil sands is not keeping pace with rapid development and that could leave the public vulnerable to major financial burdens in years to come, a scientific panel said Wednesday.

The study by Royal Society of Canada scientists, the latest report on the effects of the country’s multibillion-dollar oil sands sector, also concluded that governments and regulators are lagging world standards in their ability to oversee the industry and monitor its environmental impact.

“Current government of Alberta policy on financial security for reclamation liability leaves Alberta vulnerable to major financial risks, which are exacerbated by the current state of reclamation, which is not keeping pace with the rate of land disturbance,” the panel said in its report.

Alberta’s oil sands are the largest source of crude outside Saudi Arabia, and are the target of billions of dollars of spending by the world’s oil industry. However, the environmental impact of the rush to develop the oil is under intense scrutiny by environmentalists and politicians.

The seven-member panel, chaired by Steve Hrudey, professor emeritus of analytical and environmental toxicology at the University of Alberta, pointed out uncertainty in the industry’s ability to reclaim wetlands, given current methods.

It pointed out that technology to manage tailings ponds, the toxic byproducts of oil sands extraction, has improved over the past decade, despite recent incidents involving the deaths of hundreds of ducks that landed on a toxic pond.

However, the government should move forward with efforts to improve financial liability programs for both mining and thermal oil sands developments by putting extraction and upgrading plants on the list of facilities that must be reclaimed, the report said.

It said environmental assessment practices are deficient, based on guidelines from such agencies as the International Association for Impact Assessment, the Organization for Economic Co-operation and Development, and the World Bank.

Overall risk assessments for natural disasters, community health assessment and cumulative ecological effects are inadequate, the panel said.

Representatives from both ends of the oil sands development spectrum said the report backed up their positions.

“Given that there has already been a doubling of oil sands development approved, we need to consider slowing down development and halting any new approvals until we’ve addressed the shortcomings identified in this report,” said Jennifer Grant, oil sands program director at the Pembina Institute, an environmental think tank.

David Collyer, president of the Canadian Association of Petroleum Producers, said the size and financial wherewithal of many of the companies should give the public confidence that they can fund reclamation liabilities.

The industry is willing to talk to the government about any changes being proposed to the system.

He also said Alberta’s regulator, the Energy Resources Conservation Board, is a “world class” organization but that “there is always room for improvement”.

Controversy about water monitoring around the developments in northern Alberta has intensified in recent months after a renowned water ecologist said his studies showed regional pollution was not naturally occurring, as the industry and government-supported Regional Aquatics Monitoring Program (RAMP) had long asserted.

Federal and provincial environment ministers have both formed scientific panels to study the impact of operations on water as well as how rivers and streams are monitored. Their reports have yet to be released.

The Royal Society report said the current evidence shows that development is not an immediate threat to the Athabasca River ecosystem, but noted that concerns about RAMP and how it collects and monitors data need to be addressed.

The group said there is no current evidence to support fears that oil sands contaminants cause cancer in native people who live downstream, an emotional and contentious issue.

However, more rigorous study is needed, it said.

Editing by Peter Galloway