Brion Energy Corporation has received final approval from the Alberta cabinet to start construction of an oilsands project near Fort McMurray, Alberta, after a deal was reached with a local First Nation to drop its opposition to the plan.
“The approval process has been long but we achieved the expected outcome,” said Sveinung Svarte, president and CEO of Athabasca Oil Corporation.
“We now look forward to finalizing the approval for the project, including receipt of the Alberta Environment approval.”
The Lieutenant Governor in Council approved a plan by Brion Energy Corporation to construct the Dover Commercial Project, which is the first phase of the bitumen recovery project.
It will be about 95 kilometres (km) northwest of Fort McMurray.
Brion Energy Corporation is a joint venture owned by Calgary-based Athabasca and Phoenix Energy Holdings Ltd., which is the Canadian subsidiary of PetroChina Co. Ltd.
Brion was formerly known as Dover Operating Corp.
The final approval by cabinet was preceded by a deal in February between Brion and the Fort McKay First Nation, who agreed to drop a legal challenge to the development.
“Moose Lake is integral to the health and cultural survival of the people of Fort McKay,” said Jim Boucher, chief of Fort McKay. “Reaching this agreement with Brion shows it’s possible to protect our traditional territory while partnering with those who work in the area.”
After two years of negotiations, Brion made a commitment to develop the lease in an environmentally sound manner, while delivering social and economic benefits to the local community.
As part of the agreement, the Fort McKay First Nation agreed to remove all of their objections in relation to the Alberta Energy Regulator’s (AER) approval of the project in August 2013.
The negotiations reached a breaking point when the AER approved the Dover Oil Project, even after Fort McKay made it clear they had serious concerns.
In response, the Fort McKay First Nation united and took a stand against the project.
There are about 650 Dene, Cree and Métis community members living in Fort McKay, which is located alongside the banks of the Athabasca River in the Regional Municipality of Wood Buffalo.
The first phase of the Dover project involves the construction of the Dover North Plant (DNP) and a set of well pads to extract bitumen using Steam Assisted Gravity Drainage technology.
The DNP is expected to start production at about 50,000 barrels per day (bpd).
The Fort McKay First Nation objected to the proposed project because the DNP would be located 13 kilometres from the boundaries of the Namur Lake and Namur River reserves, which are known as the Moose Lake Reserve.
The project boundary would be eight kilometres from Fort McKay’s settlement area on the shores of Moose Lake.
In addition, there were concerns about the cumulative effects of oilsands development on traditional land use in the region.
For this reason, the Fort McKay First Nation asked the AER to impose a 20 km buffer zone around its Moose Lake Reserve.
The agreement is confidential and involves implementing best-management practices to protect the Moose Lake reserves.
Construction was scheduled to start in the winter of 2013–2014, but has been delayed due to the dispute.
Phase 2 of the project will expand the bitumen throughput of the DNP to 100,000 bpd and extend well pad development.
The Dover South Plant (DSP) will be constructed to handle bitumen production from phases 3, 4, and 5.
Construction of the DSP is scheduled to begin in 2019 and operations would start up when phase 3 well pad development begins in 2021. Phases 2 through 5 would start steaming in 2018, 2021, 2023, and 2025, respectively.
The project is expected to generate 30,000 person-years of employment during construction and attain a total production capacity of 250 000 bpd. The project would recover 4.1 billion barrels of bitumen over its projected 65-year life.
Final approval allows PetroChina to buy out Athabasca’s 40-per-cent share for $1.3-billion.