REFILE-UPDATE 2-Canada rejects Cenovus gas project in Alberta

Fri Nov 30, 2012 4:29pm EST
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* Would have drilled up to 1,275 new shallow gas wells

* Environmental impact in wildlife area considered too great

* Proponent had no plans to proceed with drilling

CALGARY, Alberta, Nov 30 (Reuters) - The Canadian government on F riday b locked a seven-year-old plan to drill more than a thousand natural gas wells in an Alberta wildlife reserve, though the project was unlikely to be developed.

Environment Minister Peter Kent ruled a now moribund proposal from Cenovus Energy Inc to drill up to 1,275 new shallow gas wells at Canadian Forces Base Suffield National Wildlife Area over a three-year period, telling reporters: "The environmental impacts are simply too great".

The 458-square-kilometer (177-square-mile) reserve in southern Alberta protects rare prairie grasslands and 19 species considered to be at risk. However the area has already been partially developed, with 1,154 natural-gas wells owned by Cenovus that were drilled before it was protected in 2003.

Cenovus said on Friday it was disappointed with the decision but the company had no plans to carry out the drilling program, conceived prior to the spin off of the oil sands developer from Encana Corp in 2009 and before new supplies from prolific shale-gas fields led to a collapse in the price of the fuel.

"Our goals have changed quite significantly," said Rhona DelFrari, a spokeswoman for the company. "So that's not a priority for us anymore, to do additional natural gas drilling there. We've moved most of our capital budget over to oil development."   Continued...