Canada Says Regulation May Boost Oil-Sands Investment

Tag : project investment

July 3 (Bloomberg) -- Canada's Natural Resource Minister Gary Lunn said companies will increase investment in Alberta's oil-sanddevelopments because government regulations may allow them to cutcarbon costs, making these projects more attractive.
Canada requires companies investing in new Alberta oil- sandprojects from 2012 to develop carbon storage by 2018, as it seeksto reduce polluting emissions. By storing carbon dioxide, a gasblamed by scientists for climate change, project developers mayneed to buy fewer carbon credits, reducing their costs.
``They're the most aggressive standards in the world,'' Lunn saidtoday in Madrid, where he's attending the World Petroleum Congress.``This a very expensive technology,'' whose development is``crucial'' because carbon prices will rise.
Companies developing Alberta's oil sands, including StatoilHydro ASA and Nexen Inc. , have called for ``clarity'' in Canadian regulation governingAlberta's tar-sand projects before they proceed with investment inrefineries.
Regulations
Companies ``are talking about huge investment and they needcertainty and clarity around the regulation,'' Mel Knight,Alberta's energy minister, said today in Madrid. ``The regulationwith respect to greenhouse gas emissions in Canada is underdiscussion at the moment, our regulation has been set for sometime.''
Investors need to understand what regulation for emissions will beset by the federal government, which will take into account theAlberta requirements, Knight said.
Carbon storage ``will push the price of carbon up, because it's soexpensive,'' Lunn said. Carbon price may rise to $75 a ton, hesaid, citing estimates of some industry analysts.
EU carbon dioxide allowances for December increased as much as 91cents, or 3.3 percent, to 28.90 euros ($45.89) a metric ton on theEuropean Climate Exchange in London today. They were at 27.53 eurosa ton as of 2:23 p.m. local time.
Alberta oil-sand fields will pump as much as 3.5 million barrels ofoil a day as early as 2015, up from 1.1 million barrels a day now,Lunn said.
To contact the reporter on this story: Eduard Gismatullin in Madrid at egismatullin@bloomberg.net Last Updated: July 3, 2008 09:47 EDT