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Imperial Oil Says Key Water Permit Could Be Handed Over Any Day

Posted on: Thursday, 5 June 2008, 18:00 CDT

By Steve Rennie, THE CANADIAN PRESS

OTTAWA - Imperial Oil Ltd. (TSX:IMO) says it could receive a key water permit from the federal government for its $8-billion oilsands mine in northern Alberta any day now.

"We've applied and we're just waiting to hear if we're going to get it or not," said Imperial spokesman Gordon Wong.

He added it isn't clear yet whether the federal Fisheries Department will reinstate the permit.

Thursday marked 30 days since a joint federal-provincial panel handed down its revised environmental assessment report.

"I don't actually know anything in terms of whether we're going to get our permit back or not, but nothing can happen until the 30 days has elapsed," Wong said.

The water permit is a central pillar of the Calgary-based company's plan to drain a swath of northern Alberta muskeg in preparation for its vast, open-pit mine.

The area is estimated to contain 4.6 billion barrels of recoverable oil. The project is targeted to produce 100,000 barrels a day in 2010, eventually ramping up to more than 300,000 barrels a day.

Handing over the permit to Imperial would cap months of legal wrangling over the Kearl project.

The Fisheries Department first granted Imperial the permit in February 2007, based on a joint federal-provincial panel's positive environmental assessment.

But a joint complaint from the Sierra Club of Canada, Pembina Institute, Prairie Acid Rain Coalition and Toxics Watch Society brought the matter before the courts this spring.

The environmental groups claimed the project would destroy huge tracts of boreal forest in the province's northern regions.

A federal judge ruled in early March that the federal-provincial assessment panel approved the Kearl development without adequately explaining its rationale.

The Fisheries Department then nullified Imperial's permit on March 20. Imperial launched a court challenge to Ottawa's decision to revoke the permit.

While the case was underway, the federal-provincial assessment panel came back with more detailed rationale after it was asked to justify its conclusion that Kearl posed no serious environmental concern.

Cabinet approved the revised environmental assessment report for the project on May 15, according to a document on a government website.

"The government of Canada's original response to the joint panel's recommendations also remains unchanged as a result of the panel's addendum," the new Kearl environmental approval says.

Cabinet's response came one day after Justice Douglas Campbell sided with the government's decision to revoke the water permit.

The Fisheries Department says it hasn't yet decided whether to reissue the water permit to Imperial.

"There is still no final decision," spokesman Phil Jenkins said in an e-mail.

Sean Nixon, a lawyer for EcoJustice who represents groups opposed to the Kearl development, said the government typically doesn't make an announcement when it issues such permits. That task typically falls to companies, who notify their shareholders.

"It's a permit to harm a public resource. You'd think that might just, on its face, be something that the public might be interested in and should have access to," Nixon said.

In the meantime, preliminary work at the Kearl site that is not tied to the water permit will continue, Wong said.

"It's important to note that Imperial has not made a formal decision as to whether we're going to proceed with the project yet or not."

Court filings show the company has already spent $228 million in advance work on the project.

Calgary-based analyst William Lacey of FirstEnergy Capital said there's a limited window to drain the muskeg before the ground freezes in that part of Alberta, just north of Fort McMurray.

"A few weeks isn't going to materially impact the developments this year," he said.

"But if it drags on for a couple of months then it probably pushes out, ultimately, the development of this by a year."

NDP Leader Jack Layton wants Ottawa to cap the Kearl project's greenhouse-gas emissions and impose other environmental checks before granting the permit.

"If the prime minister ignores these demands," he said, "then what's he's doing is approving a project that will be the equivalent of putting almost a million cars on the road and turning them on 24/7 to generate pollution."

Imperial shares closed Thursday on the Toronto Stock Exchange up $2.03 at $59.64, a change of 3.52 per cent.

Source: Canadian Press

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