National Post (National Edition)
Teck, Shell bicker over oil sands projects
CALGARY •A land dispute with Shell Canada Ltd. is threatening Teck Resources Ltd.’ s first standalone oil sands project, adding uncertainty to the miner’s push into energy as it awaits a final decision on a separate joint venture with Suncor Energy Inc.
Teck, which holds a 20% stake in the proposed Fort Hills oil sands mine, already faces the prospect of a delay on that venture as Suncor, the project operator, reviews the profitability of expansion plans.
Now, the Vancouver-based diversified miner — Canada’s largest — is facing pushback over plans to build a portion of its Frontier oil sands mine on top of neighbouring leases owned by Shell Canada.
Oil sands companies have struck a succession of highprofile alliances and pledged to work together to solve some of the sector’s largest environmental headaches, from rising greenhouse gas emissions to land disturbances. Even as they put aside competitive differences in some areas, however, the cheek-by-jowl development of Fort McMurray-area mines is testing their ability to collaborate.
As much as 550 million barrels of recoverable bitumen could be stranded because of competing priorities on adjacent oil sands leases owned by Teck and Shell, the Vancouverbased company has told the Canadian Environmental Assessment Agency (CEAA).
At an estimated cost of $14.5-billion, Teck’s proposed Frontier mine, located on 29,000 hectares roughly 100 kilometres north of Fort McMurray, is slated to produce 74,000 barrels of oil sands per day beginning in 2021, rising to 277,000 barrels daily by 2030.
Under current designs, more than one-third of the total project area — some 11,000 hectares, including a proposed processing plant, tailings ponds and, eventually, an aerodrome — spills over on to land earmarked by Shell for a 200,000-barrel-per-day mine of its own called Pierre River.
In regulatory filings, Shell has warned that the overlapping footprints of both projects could “significantly impact” its development plans for Pierre River, which is currently subject to a joint federal-provincial review process.
“It is concerning that the Frontier development will impact both the immediate plans for Shell’s Pierre River mine, as well as any future development plans of its neighbouring leases,” Shell said in the filing, dated June 4.
A Calgary-based spokesman for Shell said via email that the two companies have agreed to “work co-operatively” to resolve the dispute.
A spokesman for Teck, Chris Stannell, said in an emailed response to questions that Teck is “confident interfaces and boundary concerns between our projects will be resolved during the regulatory review process which is currently underway.”
Still, in filings submitted this month, Teck warned that relocating infrastructure to address Shell’s concerns would have a “significant negative effect on site-preparation costs, energy consumption, operating costs, amount of recoverable resource, project economics and the environment as a result of increased emissions and land disturbance adjacent to the Athabasca River.”
The company ruled out putting infrastructure at the north end of its lease, away from the boundary with Shell’s leases, because it “would not be central to mining operations and would dramatically increase haul and tailings transport distances,” it said in the filing, dated Jan. 18.
“In addition, it is estimated that more than 550 million recoverable barrels of bitumen would become unrecoverable as a result of this alternative layout,” the company said.
Another disagreement between the two companies underscores the challenges inherent in co-ordinating remediation with development.
Teck, in its designs for Frontier, has proposed building an aerodrome. It anticipates three flights per day will carry an average of 300 to 500 workers to site during construction and operations. The proposed site is currently designated by Shell for reclaimed wetlands.