By Edward Welsch Of DOW JONES NEWSWIRES OTTAWA -(Dow Jones)- Suncor Energy Inc. (SU) said it will spend more than C$1 billion on an oil sands tailings pond-management plan approved by the Alberta government Thursday. It's the third plan to deal with the oil sands industry's growing tailings ponds, which already cover more than 50 square miles of land in Alberta. Tailings ponds pose one of the most significant challenges to oil sands mining operations, as a portion of the hot water they use to separate oil from sand is afterwards contaminated with heavy metals and other toxins that make it an environmental hazard. The tailings ponds can take decades or even hundreds of years to dry on their own. Companies in Alberta have been storing the tailings in large containment ponds, but the problem keeps growing along with the oil sands industry's production, which is expected to double over the course of this decade. In an effort to deal with the problem, the Alberta government issued a directive requiring oil sands companies to submit plans to begin to cut their annual generation of tailings by 20% starting in July, ramping up to a 50% annual reduction by 2012. Suncor's plan involves a drying process in which the tailings are mixed with a wastewater treatment chemical and layered over a sloping sand beach, where the water dries over a period of weeks, and the silt left over after evaporation can be reclaimed. Kirk Bailey, executive vice president of Suncor's oil sands division, said the plan will cut tailings reclamation time by decades, and that Suncor planned to complete the transformation of its first tailings pond into a solid surface later this year. The Alberta government said it believes Suncor's plan will cut the size of its existing tailings ponds by 33 million cubic meters, or about 30%, and allow it to avoid building more ponds. The government approved Suncor's plan after adding conditions related to coke conservation and sand disposal. Alberta has so far approved plans by Suncor, the Syncrude project and the Fort Hills oil sands project, which is also partly owned by Suncor. Plans submitted by Canadian Natural Resources Ltd. (CNQ), Imperial Oil Ltd. (IMO) and Royal Dutch Shell Plc (RDSA) are still being reviewed, but don't meet the timeline set out by the government. However, Syncrude's tailings management plan also didn't meet the timeline, but it was approved after the government said additional conditions would allow it to meet the reduction schedule by 2014. Syncrude is a joint venture owned by Canadian Oil Sands Trust (COS.UN.T), ConocoPhillips (COP), Imperial Oil, Suncor, Nexen Inc. (NXY), Murphy Oil Corp. (MUR) and Mocal Energy Ltd. ConocoPhillips has agreed to sell its stake to Chinese state-owned oil company Sinopec (SNP). -By Edward Welsch, Dow Jones Newswires; 613-237-0669; edward.welsch@dowjones.com Order free Annual Report for ConocoPhillips Visit http://djnewswires.ar.wilink.com/?link=COP or call 1-888-301-0513 Order free Annual Report for Suncor Energy Inc. Visit http://djnewswires.ar.wilink.com/?link=SU or call 1-888-301-0513
