Oil sands regulations stack up well against global peers

Project-level regulation is similar in Australia and Alaska

March 23, 2012

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The environmental regulatory system in the Canadian oil sands has been depicted as “weak” by its critics and “stringent” by its supporters. Which is true? Oil sands development, just like all forms of energy extraction, has environmental impacts and risks. However, these cannot be viewed in isolation. They must be compared with alternatives. The key question is whether or not the oil sands regulatory system manages risks in a comparable way to other places.


Illustration Sébastien Thibault

To answer this question, a peer group with high regulatory standards must first be identified. Although there are many possible peers, South Australian mining and Alaskan mining and oil operations offer reasonable points of comparison: their operations are of similar size and scope, and both jurisdictions have comparable governance, investment and development philosophies. And since half of the oil sands resource is dug up from surface mining operations, comparisons to both mining and oil regulations are relevant.

It is important to recognize that Alaska and South Australia are project-level peers only. While the oil sands are poised for rapid growth, South Australia and Alaska’s growth outlooks are relatively modest. Consequently, although project-level regulation is comparable, regional requirements in northern Alberta, including regional monitoring and planning, are not direct analogues.

Over a project’s life, environmental regulation has three goals: minimize adverse effects from development, manage risks and inform stakeholders about these effects and risks. A comparison of case studies across a project’s life – from approval through operations to closure – reveals that project-level regulation in the oil sands has more similarities than differences to its peers in South Australia and Alaska.

Similarities include regulatory procedures, data requirements and measures to protect the environment. At the start of a project’s life, the data supporting the approval and the opportunities for public comment are similar for all jurisdictions. Once the facility is up and running, all regulators rely on site inspections and deal out consequences for noncompliance. In all places, facilities regularly track and record changes in air, water, land and biodiversity. And when operations stop, all places require land to be reclaimed.

One criticism of oil sands development is that projects are always approved. This is also true in South Australia and Alaska. One reason for this is that, when a project developer discovers the regulator’s requirements cannot be met, a company typically either terminates the costly application process or changes the project design to address the regulator’s concern.

Compared to Alaska, the oil sands approval process has one key difference – lands are leased to industry for the purpose of oil extraction prior to initiating the study of environmental impacts and public consultation. In Alaska, for developments approaching the size of the oil sands, the process occurs in the opposite order; before a major area is opened up to oil and gas or mineral extraction, an environmental impact assessment is conducted and stakeholders are consulted. Only after the decision is made to approve resource extraction are lands awarded to resource developers – with conditions and stipulations for the region as whole.

In many cases, data availability and transparency for oil sands projects are comparable, if not superior, to what is done in Alaska and South Australia. Alberta Environment and Water recently launched the Oil Sands Information Portal (OSIP), for example. The service provides one window for the public to view key oil sands metrics. However, in one case, oil sands data is less easy to access. Oil sands operators regularly submit environmental monitoring reports to regulators. These types of reports are available online for Alaska mining and South Australia projects, but are held subject to request in Alberta.

Still, the oil sands regulatory system is certainly not “weak.” In fact, oil sands regulators manage project-level risks in a way that is comparable to their peers in South Australia and Alaska.

Jackie Forrest, IHS CERA director, leads the research effort for the IHS CERA Oil Sands Dialogue.
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