May 7, 2008 / 10:54 PM / 10 years ago

Panel report muddies Canadian oil sands court case

CALGARY, Alberta (Reuters) - A regulatory panel has explained its environmental approval of Imperial Oil Ltd’s Kearl oil sands project, casting uncertainty on a court hearing that began on Wednesday into a suspended permit for the C$8 billion ($7.9 billion) proposal.

In its “additional rationale” document, issued late on Tuesday, the joint review panel said Alberta’s pending rules for reducing greenhouse gas emissions and 12 measures proposed by Imperial provided enough reason for its decision.

In March, in a successful appeal by environmental groups of the project’s 2007 approval, a Federal Court judge ordered the panel to explain why it said Kearl’s emissions would have insignificant environmental effect.

“While Imperial did not develop a specific GHG (greenhouse gas) management plan for the project, the joint panel finds that Imperial’s corporate energy efficiency program, as well as specific measures proposed by Imperial, are an effective surrogate,” the panel said.

After Madame Justice Daniele Tremblay-Lamer asked the panel for its clarification, the federal Department of Fisheries and Oceans withdrew its permit to disturb northern Alberta marshland, which Imperial needs to prepare the site for the 300,000 barrel a day project.

Imperial was in court on Wednesday to argue that the permit should be reinstated because it was revoked for reasons that should not have nullified the entire approval.

Environmental groups, including Ecojustice, the Pembina Institute and the Sierra Club, as well as the Canadian government, argued that Tremblay-Lamer’s decision rendered the approval invalid so the permit could not remain in place.

Imperial, as well as Ottawa’s lawyer, said they could not predict what impact the panel’s newly explained decision would have on the proceedings.

Justice Department attorney Kirk Lambrecht said the Department of Fisheries cannot reissue a permit until a complete environmental impact assessment and government approvals are in place.

“The environmental assessment informs decision-making. You want to know what the environmental effects of projects are before you issue a regulatory permit like a Fisheries Act authorization,” Lambrecht said.

Imperial said it believes the joint review panel’s reasons for its decision completes the process and fulfills all the requirements that the Federal Court outlined in March.

“We also feel it clears up or resolves many of the outstanding issues, and clears the way for the federal government to issue any future permits to allow the project to proceed,” company spokesman Gordon Wong said.

($1=$1.01 Canadian)

Reporting by Jeffrey Jones; editing by Rob Wilson

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