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Thursday, October 11, 2007

Stelmach Government Now Admits Concerns About Pace of Development

Premier Stelmach’s government has done the right thing by cancelling the lease deal with Oil Sands Underground Mining Corp (OSUM) relating to Marie Lake because it did not serve the public interests. Protecting the public interest is Job #1 of democratically elected governments.

What is equally reassuring about this action by the Stelmach government is comment by the Minister of Energy that “for the first time…he had factored in Albertans’ concerns about the rapid pace of development. YES! That is a major step forward in an effort to have our government deal in a practical way with the need for responsible and sustainable development of our non-renewable natural resources.

OSUM is now reported to be threatening to sue the Stelmach government. Fair enough if they do not get what they are entitled to under the law. That entitlement, according to the Mines and Minerals Act of Alberta, means they get reimbursement for there development, engineering and planning costs.

However, OSUM wants more. They indicate they are intending to sue for opportunity costs for no longer having access to what they claim was a potential of 50,000 barrels a day of oil from an alleged reserve potential of 252 million barrels. Good luck. The legislation empowers the Minister to cancel a lease at his discretion when he is of the opinion that any further exploration or development is not in the public interest.

I truly hope the litigation goes forward because it would clearly establish the priority role of the Crown relating to natural resource management and development. The energy industry is working for the government on behalf of citizens when it gets a license or a lease to exploit our resources. When it proceeds and plans to do its exploitation profitably the industry is working for the benefit of its shareholders, the owners of the companies. Both masters must be served but they are very different masters.

The media reported comment by a well respected Calgary based energy lawyer is helpful and telling as well. He is quoted as saying he was “surprised the government would break a contract under public pressure.” It should come as no surprise that the public common interest concerns would trump an individual enterprise concern. The public interest is almost always paramount and the only protection an individual citizen (not a corporation) has is the Charter of Rights and Freedoms.

As for the potential lawsuit by OSUM for compensation for opportunity costs, the energy lawyer is quoted as saying “If the province has caused damages, as it has in this case, there seems to be a ‘plausible claim.’” Agreed, OSUM should get their out of pocket costs back – not their opportunity costs. Alberta Energy should never have issues that lease under those circumstances in the first place.

I was fascinated by the use of the word “plausible” to describe the OSUM claim for opportunity damages on the Marie Lake lease cancellation. So I went to my Pocket Oxford Dictionary and looked up the definition of plausible. Oxford was it means to be “specious, seeming reasonable or probable; persuasive but deceptive. Pretty much says it all don’t you think?