From: Reuters
Published March 6, 2008 03:33 AM

Imperial's oil sands approval needs details: court

By Scott Haggett

CALGARY, Alberta (Reuters) - The regulatory panel that cleared Imperial Oil Ltd's C$8 billion Kearl oil sands project needs to explain why it approved measures the company proposed to manage greenhouse gas emissions, Canada's Federal Court ruled on Wednesday.

Federal and provincial regulators gave the proposed 300,000 barrel per day oil sands mine in northern Alberta the green light a year ago. However the decision was challenged by a coalition of environmental groups who asked a court to block the approval.

They argued that the panel that approved the project was lax in overlooking concerns over mine tailings, water contamination, the project's effect on endangered species and carbon dioxide emissions.

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In her ruling, released on Wednesday and posted on a court Web site, Madame Justice Daniele Tremblay-Lamer sided with the environmental groups on the emissions issue, writing that the panel did not provide a clear reason for concluding the greenhouse gas emissions would have insignificant environmental effects.

"The panel must, in my opinion, explain in a general way why the potential environmental effects, either with or without the implementation of mitigation measures, will be insignificant," Tremblay-Lamer wrote in her ruling.

Tremblay-Lamer ruled it would be inappropriate to reconvene the panel because of the emissions issue. However it must "provide a rationale for its conclusion that the proposed mitigation measures will reduce the potentially adverse effects of the project's greenhouse gas emissions to a level of insignificance."

Kearl is expected to produce 3.7 million tons of carbon dioxide annually, the equivalent of 800,000 passenger cars.

Neither Imperial, Canada's biggest oil producer and refiner, nor the groups opposing the panel decision could be immediately reached for comment.

Imperial wants to develop Kearl in 100,000 barrel per day phases, though it has not yet decided if it will go ahead with the project.

The project, about 70 km (44 miles) north of Fort McMurray, Alberta, does not include an upgrader to convert the tar-like bitumen stripped from the sand into synthetic crude. Instead, the bitumen will be sold on the open market to refiners.

Imperial's partner in Kearl is its major shareholder Exxon Mobil Corp.

Imperial has pegged the cost of the project at between C$5 billion and C$8 billion, though to date, no major oil sands project has been completed on budget.

(Reporting by Scott Haggett; editing by Rob Wilson)

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