Canada Proposes New Oil Sands Environmental Monitoring Plan

Canada's federal government proposed a plan to revamp environmental monitoring in the country's oil sands industry in response to critics of the current system.

The plan would create a new environmental monitoring framework to collect water-surface data from several areas around the oil sands region in northeastern Alberta. The cost, at roughly C$20 million a year, will be borne by oil sands producers.

The regulatory overhaul comes after a recent series of reports and scientific studies concluded the existing environmental monitoring system has failed to examine all the sources of pollution created by the oil sands industry.

The oil sands industry already produces about half of the 1.9 million barrels a day of Canadian oil that is exported to the United States, and is expected to double in size during this decade.

But that growth rate partly depends upon the industry's ability to defend its environmental record. Approval of a key Canadian oil pipeline that will transport mostly oil sands crude, TransCanada Corp.'s (TRP) Keystone XL, was delayed this month after the U.S. State Department asked for more environmental studies.

"We are confident that we can protect the environment while seeing the economic benefits of the oil sands," Environment Minister Peter Kent said after unveiling the plan late Thursday.

The federal government worked with the province of Alberta to design the new system, which will be a joint effort between the province and the federal government. Alberta's environment ministry is expected to unveil its own recommendations for the new system in June.

Flaws in Alberta's current monitoring system were exposed last year by University of Alberta water scientist David Schindler. His work showed that air pollution from the oil sands industry was settling on snow and then melting into the Athabasca River, and possibly creating health effects for animals and humans downstream.

After first insisting that the pollution Schindler uncovered was naturally present rather than created by industry, the Alberta government said this year that its monitoring system, a joint-effort between the provincial government, oil sand companies and native groups, is inadequate to measure the kind of pollution that Schindler found.

The first phase of the revamped system will measure water quality at several points in the Athabasca River and its tributaries. A later phase will monitor upstream water sources and air quality. The system will be designed to measure cumulative effects on the environment and to better isolate which kinds of pollution are caused by natural oil sands seepage, and which are created by industrial activity, the government said.

Environmental groups praised the plan and said the federal government should have a greater role in regulation and monitoring.

"It's time to stop letting industry do government's job," said Gillian McEachern, a spokeswoman for the environmental advocacy group Environmental Defence. "The federal government already has the tools and jurisdiction to not only collect the right information, but to create rules that put limits on the pollution coming from the tar sands and to prosecute offenders," she said.

-By Edward Welsch, Dow Jones Newswires; 403-229-9095; edward.welsch@dowjones.com

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