Decision looms on Teck’s Frontier oil sands project

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By Peter Kennedy

The Federal Government is just weeks away from having to make a decision on another major Canadian resource project. This time it involves an Alberta oil sands operation known as the Frontier Project, which is owned by Vancouver-based Teck Resources Ltd. [TECK.B-TSX; TECK.A-TSX; TECK-NYSE]

Located between Fort McMurray and Fort Chipewyan in northeastern Alberta, Frontier is truly large. The $20 billion truck and shovel oil sands mine is expected to produce 260,000 barrels per day of bitumen, while delivering $55 billion in provincial royalties and taxes over a projected lifespan of 41 years. The project is also expected to generate $12 billion in federal income and capital taxes.

However, in deciding whether or not to approve Frontier, Ottawa will need to weigh the impact of such a large project on both the environment and its greenhouse gas commitments. It is expected the project will cover an area about half the size of Edmonton, potentially adding 4.1 mega-tonnes annually to Canada’s greenhouse gas emissions – this at a time when Canada is trying to reduce its carbon impact.

With a decision expected before the end of February, Ottawa will also need to be mindful of the economic impact on Alberta where the population is still feeling the impact of the drop in oil prices and the lack of progress on key pipeline projects.

Frontier is expected to employ up to 7,000 people during peak construction and 2,500 workers while it is in operation. Therefore, any decision to proceed will be applauded in places like Edmonton, which currently has the largest unemployment rate of any major city in the country.

Teck has said it is committed to developing the Frontier Project responsibly, by incorporating best practises for environmental protection, tailings management, water use, reclamation and management of greenhouse gases.

In its Frontier Project literature, Teck said oil is expected to remain an important source of energy into the foreseeable future, along with growth in renewable energy options such as solar and wind. Global energy demand is expected to grow by 32% by 2040. In that context, Teck has said responsible development of Canadian oil sands projects such as Frontier will play a key role in meeting this growing demand.

The Frontier Project has undergone extensive review by federal and provincial regulators, stakeholders and Indigenous communities. It won regulatory approval from a joint Alberta-federal review in 2019. Alberta Premier Jason Kenney has said the project must be approved by Ottawa as soon as possible.

Teck Resources is a diversified resource company with business units focused on steelmaking coal, copper, zinc and energy. The company currently has interests in 13 operating mines, a large metallurgical complex and several major development projects in the Americas.

On Wednesday, the company’s Class B common shares advanced 0.338% or $0.06 to $17.81. The shares are currently trading in a 52-week range of $17.47 and $34.24.

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