Mine Reclamation Costs In The Alberta Oil Sands

This paper presents an overview of surface mining activity in the Canadian oil sands and how the mine operators interact with the province of Alberta's Mine Financial Security Program (MFSP), which took effect April 1, 2011. The MFSP approach to reclamation assurance results in the government of Alberta sharing a portion of reclamation liability through the majority of an oil sand mine's life. In order to determine the potential fiscal magnitude of this shared liability, an examination of the expected costs of oil sands reclamation activities through a study of corporate asset retirement obligation (ARO) liabilities and other corporate disclosures is presented. The province of Alberta's Environmental Protection Security Fund (EPSF), which formerly secured oil sands mine reclamation activities is discussed. Reclamation costs in the oil sands are poorly understood. The MFSP provides what it characterizes as a conservative estimate of C$75,000/ha, while corporate disclosures by Canadian Oil Sands Ltd. place expected costs at C$180,000/ha. There is significant risk associated with the apparent uncertainty surrounding reclamation costs.