Coal Mine Closure 1 DOES LEGISLATION IN ALBERTA PROTECT THE PUBLIC FROM THE FINANCIAL OBLIGATIONS OF COAL MINE CLOSURE? By JEFFREY ALAN WICKENS A thesis submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS in ENVIRONMENT AND MANAGEMENT We accept this thesis as conforming to the required standard ……………………………………………. Dr. Lenore Newman, MEM Program Head School of Environment and Sustainability ……………………………………………. Dr. Audrey Dallimore, Thesis Supervisor School of Environment and Sustainability ……………………………………………. Dr. Anthony Boydell, Director School of Environment and Sustainability ROYAL ROADS UNIVERSITY May 2009 © Jeffrey Alan Wickens, 2009 ISBN: 978-0-494-52182-3 Coal Mine Closure 2 Abstract Coal mining in Alberta is influenced by economic, environmental, and social factors that often arise without warning and have the potential to bring an abrupt end to a prosperous operation. Understanding the issues is imperative to addressing how the public is protected from the financial obligations associated with the closure of a coal mine. How the obligations of industry, government, and the public collide to form the basis of responsible and sustainable development is also addressed. A recent case study that drives to the heart of this question provides the foundation for informed discussion and recommendations. With the demand for energy increasing, Alberta will continue to be a major source of energy into the future. As such, it is imperative that legislation is designed to ensure proper life- cycle management of Alberta’s coal resources. Coal Mine Closure 3 Acknowledgements To embark on this venture after being out of school for 20 years was both frightening and exciting. I have survived and believe I am a better person for it. I have met many amazing people during this time and want to take this time and space to acknowledge those that have contributed so graciously of their time and energy. Thanks Cohort for making school fun. Best wishes to all of you. I want to thank my employer, ARC Resources Ltd., who supported my return to school from the beginning. Their commitment of time and resources was a comfort that contributed greatly to my success. To Audrey Dallimore, my thesis supervisor, thank you for making me a victim of your green pen. Your guidance and honesty gently pushed me in the right direction. Lastly, I want to express my deepest gratitude to my best friend and wife Susan, who not only encouraged me to continue my education, but provided unwavering support throughout. I am eternally grateful. “Delay is the deadliest form of denial” Cyril Northcote Parkinson (1909 – 1993) Coal Mine Closure 4 Table of Contents ABSTRACT .................................................................................................................................... 2 ACKNOWLEDGEMENTS ............................................................................................................ 3 TABLE OF CONTENTS ................................................................................................................ 4 LIST OF APPENDIXES................................................................................................................. 6 LIST OF TABLES .......................................................................................................................... 7 INTRODUCTION .......................................................................................................................... 8 RESEARCH SCOPE AND OBJECTIVE ............................................................................................ 12 THESIS OUTLINE ........................................................................................................................ 13 SUSTAINABILITY LINK ............................................................................................................... 13 SIGNIFICANCE OF RESEARCH ..................................................................................................... 14 BACKGROUND TO THE ISSUES ............................................................................................. 15 COAL MINING LEGISLATION IN SEVERAL REPRESENTATIVE JURISDICTIONS ............................. 15 Legislation in Alberta ........................................................................................................... 15 Energy Resources Conservation Board. ........................................................................... 16 Alberta Environment. ........................................................................................................ 18 Legislation in British Columbia ............................................................................................ 20 Legislation in Saskatchewan ................................................................................................. 23 FINANCIAL SECURITY ................................................................................................................ 25 Overview ............................................................................................................................... 25 Types of Financial Instruments ............................................................................................. 26 Adapted from (Miller, 1998) ................................................................................................. 27 Issues Associated with Financial Instruments ...................................................................... 27 Industry Response ................................................................................................................. 29 Use of Financial Security in Alberta ..................................................................................... 29 ISSUES AFFECTING THE FINANCIAL IMPLICATIONS OF COAL MINE CLOSURE ............................ 31 Environmental Issues ............................................................................................................ 32 Land reclamation. ............................................................................................................. 32 Hydrology. ........................................................................................................................ 34 Wildlife. ............................................................................................................................ 35 Future land use. ................................................................................................................. 36 Social and Economic Issues .................................................................................................. 37 Individuals......................................................................................................................... 38 Community. ...................................................................................................................... 39 Obligation and Sustainability ................................................................................................ 39 Estimating the Financial Cost of Coal Mine Closure ........................................................... 41 RESEARCH METHODOLOGY.................................................................................................. 44 LITERATURE REVIEW ................................................................................................................. 44 CASE STUDY .............................................................................................................................. 44 PERSONAL INTERVIEWS ............................................................................................................. 44 ETHICAL CONSIDERATIONS ........................................................................................................ 45 Coal Mine Closure 5 CASE STUDY – SMOKY RIVER COAL LIMITED ................................................................. 45 MINE BACKGROUND .................................................................................................................. 45 BANKRUPTCY ............................................................................................................................ 46 CURRENT STATE OF THE MINE ................................................................................................... 47 DISCUSSION ............................................................................................................................... 48 LEGISLATION ............................................................................................................................. 49 FINANCIAL SECURITY ................................................................................................................ 49 COAL MINE CLOSURE ISSUES .................................................................................................... 50 FINANCIAL COST ESTIMATION ................................................................................................... 51 CASE STUDY .............................................................................................................................. 51 GENERAL ISSUES........................................................................................................................ 52 CONCLUSIONS AND RECOMMENDATIONS ....................................................................... 52 CONCLUSIONS ...........................................................................................................................