I know, I know, it’s shocking to learn that neither the oil and gas industry, nor the enviros, are happy with the Alberta government’s draft Lower Athabasca Regional Plan, which was released on Tuesday.

Some of the 14 energy companies whose oil sands assets in the area could be affected by the potential protection of two million hectares of land in the province’s bitumen heartland think the plan goes way too far. On the environmental front, the Pembina Institute says the plan doesn’t go far enough.

But rather than weighing the merits of the industry and environmental views on the plan, let’s take a look at this from the provincial government’s perspective – the body that is elected by Albertans to represent them.

Drift over to the Alberta Energy website, click on “oil sands” and information there points out the province has 169.9 billion barrels of oil sands reserves. But as everyone who follows the oil and gas industry knows, what’s in place in the ground doesn’t always get produced. And that holds true for the oil sands just as it does any other petroleum deposit.

In the case of the oil sands, public perception challenges are as much a threat to future production as any technical or economic ones. The sector has become a lightening rod for criticism due to issues that range from the sector’s use of water, to its treatment of industrial wastes, its contribution to Canada’s carbon emissions and on and on it goes. And that criticism, which isn’t going away, is putting pressure on consumers to think about where their oil is coming from and how it is produced. Such thinking could severely curtail how much of that 169.9 billion barrels is eventually produced.

So view the Alberta government as taking one for the team with the release of this draft plan. It knows it’s going to get criticized for it, but it’s taking a long-term view here. By conserving some land and preventing some development in the lower Athabasca region, it potentially improves the optics of the oil sands, and that could ultimately lead to more oil sands activity (and more royalties and jobs for Alberta) than otherwise would have happened.

By the way, the oil and gas industry may have set itself up as the bad guy in this debate with its initial stance on how compensation should be handled for the companies who will not be able to work on their oil sands assets if this plan becomes a reality.

The government is proposing to pay companies back the amount they spent on the rights for a lease and any work done on it. But industry is looking for more than that. “Compensation is not good enough,” Athabasca Oil Sands Corp. president and CEO Sveinung Svarte told the Globe and Mail on Tuesday. “People have bought valuable resources to develop them, and if compensation should be done, it should be for the value you give up.”

But keep in mind the Alberta government just put forth a budget with a $3.4 billion deficit and it doesn’t plan to be back in black until 2013-2014. If the government were to agree to demands like Svarte’s on compensation, what effect would that have on the province’s fiscal future? Continued deficits beyond 2014?

I don’t know the answer to that question, but I can’t imagine too many Albertans will appreciate its government providing compensation for the hard-to-quantify “value you give up” of oil sands leases if it could lead to future deficits. That isn’t going to fly.

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