Ex-Colonel Battles Alberta Image as Lax Energy Regulator

Jim Ellis once led Canadian troops into the Afghan region of Kandahar. Now the retired Army colonel is facing another battle -- proving to environmentalists that Alberta can be an effective regulator of energy projects.

The province, which holds the world’s third-largest proven crude oil reserves after Saudi Arabia and Venezuela, created a single regulator in June to oversee energy projects. Ellis has taken on the job at a time when production from Alberta’s oil-sands projects and the proposed Keystone XL pipeline to ship the product to U.S. markets have become a lightning rod for environmental opposition.

“We can play a pivotal role for the future of the province in developing oil and gas and coal,” Ellis, 55, said in an interview yesterday at the Calgary offices of the Alberta Energy Regulator. Ellis is the first chief executive officer of the organization, which will complete the bulk of its transition into the province’s single energy regulator on March 31.

Energy production is crucial to the economy in Alberta, which holds about 98 percent of Canada’s oil reserves. The province got 22 percent of its revenue from oil, natural gas and coal royalties and lease sales in the first six months of this fiscal year. Oil-sands development is poised to attract a record C$32 billion ($29 billion) in spending this year, according to Peters & Co., a Calgary investment bank.

Improving Enforcement

Ellis has already met with the U.S. State Department in Canada’s effort to win approval for the $5.4 billion Keystone XL pipeline. He’s also met with environmental groups including the Natural Resources Defense Council, which has called Alberta regulators lax in their oversight of companies developing the tar-like crude.

There are already some signs enforcement is improving, said Simon Dyer, a policy director at Pembina Institute, a Calgary-based environmental group. The agency earlier this month rejected Canadian Natural Resources Ltd. (CNQ)’s plans for new production at the site of an oil-sands leak at its Primrose project.

“There are actually a few notable examples where they have said ‘no’ to industry, which is a significant departure” from the prior regulatory record, Dyer said.

Ellis dismisses the idea his agency is acting more aggressively. Energy companies are largely compliant, he said. Any impression of a crackdown may stem from the regulator’s efforts to publicize its actions.

“We’re far more public and transparent than we’ve ever been before,” Ellis said.

Ellis said the oil-sands industry’s international image was tarred by a 2008 incident in which 1,600 ducks died after landing in a toxic tailings pond on a project site.

“We were dragged, kicking and screaming, onto the international stage,” he said. “Everything we do in the province is of high interest.”

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net

To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Tina Davis, Jasmina Kelemen

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