07/30/2013 01:06 EDT | Updated 09/29/2013 05:12 EDT

CNRL's Ongoing Cold Lake Spill Puts World Scrutiny On Alberta's New Regulator: Critic

CP//Larry MacDougal

EDMONTON - An ongoing spill of tarry bitumen in northern Alberta is focusing the world's attention on the province's new energy regulator, says an environmental think-tank.

"The way in which Alberta and Canada is managing the oilsands has already attracted significant international attention and that's because it's not possible to point to significant progress in terms of the big environmental issues," said Chris Severson-Baker of the Pembina Institute.

"When stories like this emerge, here's another problem. The regulator doesn't seem to be in control of the situation."

For weeks now, bitumen has been oozing to the surface at an oilsands project owned by Canadian Natural Resources Ltd. (TSX:CNQ) on the Cold Lake Air Weapons Range. The leak has so far released almost a million litres of bitumen and has fouled about 20 hectares of land.

The bitumen is probably being forced to the surface through cracks in overlying rock created by the company's extraction method, which uses hot, high-pressure steam to force the product up wells.

This year's spill seems similar to a 2009 release in the same spot. After that spill, the Energy Resources Conservation Board, as the regulator was then known, allowed CNRL to resume production using lower steam pressure, even though an investigation failed to discover exactly what happened.

The Alberta Energy Regulator, which replaced the conservation board earlier this summer, now has a chance to show that it plans to conduct business differently, said Severson-Baker.

"There's an opportunity to really compare and contrast how the ERCB dealt with the first incident at this same site with how they deal with it this time," he said.

There's little doubt the world is watching.

Newspapers from the Wall Street Journal to England's The Guardian have written about the CNRL spill. It also comes at a time when Alberta's and Canada's environmental record is being considered by U.S. politicians trying to judge what the impact would be of the proposed Keystone XL pipeline, which would carry oilsands bitumen south from the oilsands to refineries on the Gulf Coast.

Just last week, a major study suggested that fewer than one per cent of the industry's environmental infractions resulted in enforcement actions.

Cyclic steam stimulation is used in four oilsands projects that represent about one-third of the industry's production from in situ projects, which extract bitumen in place without digging mines.

It's well-understood technology that's been used successfully around the world for 30 years, said Brij Maini from the University of Calgary's petroleum engineering department. In some reservoirs, it's the only in-situ technique that works.

The trick is to apply enough steam pressure to crack the rock and allow the steam into the reservoir without cracking the rock so much that the bitumen is forced to the surface.

"It requires a good balance between exceeding the fracture limit, but still staying within a certain limit," he said.

In Alberta, that sweet spot is narrower.

"The problem with Alberta is that our reservoirs are very cold," Maini said. "Alberta ... projects will not work unless you use higher steam pressures."

The CNRL leak raises questions about how well that balance is understood, said Severson-Baker.

"Are we doing a good job of designing these projects, keeping in check the desire of these companies to extract as much economic return as possible while still protecting the integrity of the cap rock?"

The ball is in the new regulator's court, he suggested.

"It's up to the regulator to be willing to take that approval away because it's based on a failed design. I don't think a project can legitimately continue with a track record like this."


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