Athabasca Oil Corp. (ATH), the oil-sands developer that began publicly trading in 2010, plunged in Toronto trading following an Alberta court’s decision to allow an aboriginal group to appeal the provincial regulator’s approval of the company’s Dover oil-sands project.
The shares fell 10 percent to C$6.27 at the close in Toronto. The stock was halted earlier after declining as much as 21 percent, the biggest ever for the Calgary-based oil producer.
The Alberta Energy Regulator on Aug. 6 approved the Dover proposal, noting in its 40-page decision that the project won’t have a direct impact on the Moose Lake area, a traditional territory of the Fort McKay First Nation. The aboriginal group, which is surrounded by oil sands operations, had requested a 20-kilometer (12-mile) buffer around the project to protect their traditional hunting territory and argued that the cumulative effects of oil-sands development put their environment at risk.
“Fort McKay First Nation has a number of concerns about the proposed project, particularly relating to the cumulative effect this project will have on the environment, having regard to the large number of other similar projects in operation or planned in the region,” Justice Frans Slatter of the Court of Appeal of Alberta, said in the decision today.
The Dover project is expected to create C$5.3 billion ($5.2 billion) annually in economic activity, the company has said. Athabasca had planned to proceed with the sale of its stake in the project to PetroChina Co. (857) following the regulator’s approval in August.
“This decision is significantly negative for Athabasca,” wrote Mark Friesen, an analyst at RBC Capital Markets, in a note to clients. “The fact that the right to challenge the constitutional argument was granted by the Court of Appeals significantly increases the risk of regulatory approval delay.”
The Dover project contains reserves of 4.1 billion barrels at a 50 percent recovery rate, the regulator said in August. Athabasca expects production at the site to reach 250,000 barrels a day at full capacity.
PetroChina is planning to invest at least $60 billion this decade in global oil and natural gas assets. Athabasca in January 2012 sold a 40 percent stake in the MacKay River oil-sands project to a PetroChina division for C$680 million.
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