The oilpatch has little to fear from the new Liberal minority government, despite the beating of drums – oil drums, that is – in Alberta.

The votes hadn’t even been tallied last week when Energy Minister Murray Smith paraded the Ottawa bogeyman before the daily press.

Boo! Watch out for “the Liberal/ NDP agenda,” Smith warned, predicting higher gasoline prices and chanting the dreaded K-word.

The Alberta government’s line on the international climate change treaty is starting to sound like that scene from A Fish Called Wanda, where Kevin Kline taunts the stuttering Kenny: “It’s K-K-Kyoto . . . and it’s coming to k-k-kill us!”

Smith’s predictions won’t be any more accurate than the election prognostications from the astrologers – uh, sorry – the pollsters.

For one thing, gasoline prices rise and fall on the international price for oil and availability of supplies, not on the whims of politicians in Ottawa.

For another, can you imagine the revolt from motorists already fuming about high pump prices if a Liberal/NDP cabal decided to raise federal gasoline taxes to pay for, say, implementing the Kyoto accord?

If Paul Martin and Jack Layton want to run out of gas before the next election campaign even starts, that would be the fastest way to do it.

Yes, Martin supported ratification of the Kyoto Protocol. And the NDP endorses the accord, as does the Bloc Quebecois.

But all of them will have to come up with a better plan than now exists if they want to implement the thing, especially over the objections of Stephen Harper’s Conservatives.

Martin, despite running on the Liberals’ sense of social values, remains a pro-business, fiscally conservative prime minister.

And even the NDP promised during the campaign not to remove tax incentives that encourage investment in, and expansion of, Alberta’s oilsands, despite the huge increase in greenhouse gas emissions that will ensue.

So please, Murray Smith and other Alberta cabinet ministers, tuck the Ottawa bogeyman back under the bed for a long-overdue rest.

At least give this minority government, with its healthy Conservative Opposition from the West, a chance to work.

FORT HILLS REVIVAL?
UTS Energy Corp. is another step closer to kick-starting the stalled Fort Hills oilsands project, about 90 kilometres north of Fort McMurray.

The Calgary-based company says it has an agreement with Alberta Energy that will allow UTS Energy to move forward with the oilsands mine and upgrader, providing the company succeeds in buying TrueNorth Energy interest in the project.

The Fort Hills project was shelved in January 2003, after its 78-per-cent partner, TrueNorth, a unit of privately held Koch Industries Inc. in the U.S., backed out. TrueNorth failed to find any partners to participate in the venture.

UTS Energy, which holds a 22-per-cent interest in the project, expects to acquire TrueNorth’s entire interest for $125 million plus seven million common share purchase warrants by July 5.

UTS also got a crucial boost in terms of much-needed expertise in late June, when William Roach joined the company as president.

Roach headed the $2.3- billion White Rose oil project in Newfoundland for Husky Energy Inc., and he brought the offshore development in on budget.

UTS has scaled back the original $3.3-billion Fort Hills oilsands project and now plans a phased-in development.

The first phase, to cost $1.6- $2 billion, would produce 50,000 barrels of bitumen a day by the end of June 2009. Further expansions would ramp up production to 200,000 barrels a day.

The Alberta Energy and Utilities Board has already approved the Fort Hills project. But the oilsands mine, which would affect ecologically significant wetlands in the area, still faces a challenge by environmental groups.

They’ve asked the Federal Court of Canada to order the federal government to broaden the scope of an environmental impact assessment for the development. A ruling is expected later this year.

CBM CAUTION
The B.C. government needs to be careful that in its zeal to develop the province’s coalbed methane (CBM) reserves, it doesn’t spark an international incident.

Community leaders in Fernie are worried that the new CBM industry could threaten the town’s growing identity as a Rocky Mountain ski and summer destination.

Across the border, pro-industry Montana Gov. Judy Martz is concerned that extraction of the natural gas trapped in coal seams in B.C. and a proposed (and since cancelled) new coal mine close to the border may harm the scenic Flathead Valley – one of the state’s most popular attractions.

Premier Gordon Campbell’s Liberals have implemented tax incentives and other measures specifically to stimulate CBM development.

Derek Doyle, head of B.C.’s Oil and Gas Commission, insists the regulator has a rigorous process for overseeing all stages of CBM development, from test wells through to commercial production.

It may seem unfair for politicians in the U.S., which now obtains about seven per cent of its annual natural gas production from CBM, to complain about B.C. wanting to develop its coal gas resource.

But it’s because of past problems with CBM development in the Powder River Basin of Montana and Wyoming – from contaminated water wells to land-gobbling drilling operations – that the Americans are worried.

The B.C. government needs to do more to educate the province’s residents and B.C.’s cross-border neighbours about how the resource will be developed here in a way that safeguards the environment.

WASTE NOT . . .
Petro-Canada’s plan to use City of Edmonton-treated wastewater in the company’s Strathcona refinery is both cost-saving and environmentally friendly.

The company needs the water in its refinery to strip sulphur from fuels to meet stricter federal regulations requiring low-sulphur gasoline and diesel.

But instead of pumping water directly from the North Saskatchewan River and cleaning it, Petro-Canada will use treated wastewater that requires only one extra filtration step before it can be used in the refinery.

The company will be using the city’s treated wastewater, pipelined to the refinery, in 2006 and expects to use 15 million litres each day by 2008.

Petro-Canada will save money by not having to treat raw water taken directly from the river.

Diverting wastewater to the refinery, where the process will return only 30 per cent of the water to the river, will also prevent the few pollutants that don’t get filtered out by the city’s treatment process from entering the river.

The pilot project is a first in Alberta, according to a report from Edmonton.

It shouldn’t be the last, as long as a river’s ecosystem can afford to part with the wastewater.

COLD OFF THE PRESSES
Some old news has come back to haunt Vancouver-based Teck Cominco Ltd.

The Spokesman-Review newspaper in Spokane, Wash., reported that newly obtained documents reveal Teck Cominco’s Trail, B.C., smelter dumped tonnes of toxic mercury into the Columbia River for decades.

But Doug Horswill, senior vice-president of environment and corporate affairs for Teck Cominco, says the news reports are based on information that’s 24 years old and are “extremely misleading.”

The Spokesman-Review reported that 1.4 to 3.2 tonnes of mercury, contained in slag or waste from the lead-zinc smelter, were discharged into the river every year since the 1940s, based on documents obtained from B.C.’s Ministry of the Environment.

But Horswill said the company has spent more than $1 billion in plant improvements over the past 20 years to help minimize discharges into the water and air.

Mark Edwards, environmental manager for Teck Cominco in Trail, says annual discharges to water have been reduced by more than 99 per cent and air emissions have been cut by more than 90 per cent in the past 10 years.

“Mercury levels are now well below all applicable water quality standards for the Columbia River,” Edwards says.

Washington State officials say they were surprised by the volume of mercury reported in the press.

But Edwards says they shouldn’t have been. He says the Trail smelter’s information on discharges was widely shared with both Canadian and U.S. regulators and with the public in the early 1990s, during the smelter’s permitting process.

Maybe the Spokesman-Review should have gotten a copy.

(Mark Lowey can be reached at mark@businessedge.ca)