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Drilling Program Nixed for Alberta Plains

An epic Canadian environmental contest has ended in victory for a prized patch of wild Alberta plains and a loss for a natural gas producer. A 1,275 well, shallow gas drilling program, proposed by Cenovus Energy, will not be allowed, Canada Environment Minister Peter Kent announced Friday.

Kent's decision upheld recommendations by a joint review panel of federal and provincial regulatory agencies following prolonged technical studies and lengthy public hearings.

"Responsible resource development" -- the national Conservative government's buzz phrase for its overall economy, energy and environment policy -- "is not an automatic green light for all development projects," Kent said. "Only those projects that meet our environmental rigor will be approved."

On the economic front, the drilling program was a natural for Cenovus, which was split off from Encana Corp. in 2009 (see NGI, Sept. 14, 2009). The target was shallow gas on the Suffield Block in a vast military reserve in southeastern Alberta. The program extended a production cornerstone of the firm's corporate ancestor, Alberta Energy Co. (AEC). The target region was already studded with 1,154 shallow gas wells previously drilled by AEC, which merged with PanCanadian Energy Corp. in 2002 (see NGI, Feb. 4, 2002).

But conservationists, the review panel and Kent emphasized that the times have changed since AEC grew up on a diet of Suffield gas after its creation in 1975 as an investor-owned, provincial government-chartered industrial growth instrument. The 458-square-kilometer (177-square-mile) zone where Cenovus wanted to do the new drilling was declared a Canadian National Wildlife Area in 2003.

The designation bans heavy military training as well as industrial activity in order to protect a rare intact block of natural mixed-grass prairie that houses about 1,100 wildlife species from antelope to rattlesnakes, including 19 deemed to be at risk, such as the swift fox. Only about 6% of the original natural plains of western Canada have survived railway construction, settlement and industrialization since the mid-19th Century, and about 30% of the remaining ancestral prairie environment is in the Suffield preservation zone.

Cenovus made no immediate reply to Kent's announcement. The company, while possibly disappointed as a matter of official record, was not expected to count the decision as a great loss.

The ruling was clearly foreshadowed by the outcome of the environmental contest in the review panel's report, which highlighted risks posed by industrial activity on grasslands. The rejected drilling program was proposed at a time of high and rising natural gas prices, before the onset of shale development and glutted markets across North America and while Cenovus was still part of AEC descendant Encana Corp. Now separate from its parent, Cenovus is primarily an oilsands developer.

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