Imperial Oil Ltd., Canada's largest oil company, lost a legal bid to overturn a federal regulatory decision that could delay a planned C$8 billion ($7.98 billion) oil-sands project in Alberta.
The government acted properly to cancel a water permit because another court found flaws in an environmental report on the Kearl tar-sands project, Federal Court Justice Douglas Campbell said today in a ruling on the court's Web site.
``Since the report is incomplete it must be completed, and once completed it must be, yet again, placed before'' the federal government for approval before a new water permit is issue by the fisheries department, Justice Campbell wrote.
The Calgary-based oil company on March 20 received a letter from the government withdrawing a fish habitat water permit needed for the Kearl mine in northern Alberta. Imperial has said in court losing the authorization may delay development of Kearl by a year or more.
Imperial is studying the decision and it's too early to say if the ruling will be appealed, spokesman Gordon Wong said today in a telephone interview.
``I can't really speculate about the impact on the schedule at this point,'' he said. ``We'll be working through what it potentially means'' to the project's schedule.
The company will do as much work on the site as possible without the permit, Wong said.
No More Flexibility
Imperial had used up all the timing flexibility built into this stage of the development, the company's lawyer said at a court hearing on May 7 and 8 in Calgary. Imperial is 70 percent owned by Exxon Mobil Corp.
``We'll be working with the federal government in order to comply with the process required'' to get a new permit, Imperial's Wong said. ``There's a process in place and we'll follow the process.''
The permit was pulled after a judge in March ordered a provincial-federal review panel to justify its finding that the mine won't have a significant adverse impact on air quality. The panel issued its rationale on May 6.
Kearl's regulatory approval was challenged by a coalition of groups including the Pembina Institute for Appropriate Development, a non-profit Alberta-based group that researches environmental policy.
A company decision on proceeding with Kearl, which could start production in 2011, may be made in the third quarter, incoming Chief Executive Officer Bruce March told reporters on March 26 during a press conference.
Kearl is proposed to initially produce 100,000 barrels a day of extra-heavy oil from tar-like deposits.
Greenhouse Gas
The mine will be responsible for average emissions of 3.7 million metric tons of carbon dioxide equivalents a year, or about the same amount of pollution produced annually by 800,000 cars, according to Imperial's estimates.
``There's a recognition that we need a higher standard associated environmental assessment of oil-sands projects,'' said Simon Dyer, Pembina's director of oil sands. ``From a greenhouse gas perspective, you're going to see more of these challenges until we get adequate mitigation that does actually result in real and absolute reductions in greenhouse gas pollutants.''
Imperial controls 25 percent of joint venture Syncrude Canada Ltd., the largest oil-sands producer in the world. The company also owns four refineries and about 1,900 Esso-branded fuel stations across Canada.
Imperial fell 56 cents to C$57.38 on the Toronto Stock Exchange. The stock has gained 5 percent this year.
The case is between Imperial Oil Resources Ventures Ltd. and Minister of Fisheries and Oceans, T-460-08. Federal Court of Canada (Ottawa).
