Judge rejects Imperial Oil request for permit

Imperial Oil Ltd. failed Wednesday to get a judge to reinstate a key water permit to build a $8 billion oil sands mine in Northern Alberta.

Federal Judge Douglas Campbell dismissed Imperial's application to have Canada's Department of Fisheries and Oceans reinstate the permit at the Kearl oil sands mine.

The company has said losing the permit could set the project back by a year.

In his ruling, Campbell ruled that Canada's Department of Fisheries and Oceans was right in yanking the permit, since it was based on a "fundamentally flawed" environmental report.

The permit is central to Imperial's plans to drain a vast stretch of northern Alberta bog land in preparation for its vast, open-pit mine.

Imperial Oil is a Canada-based integrated oil company, but Exxon Mobil Corp. has a 69.6 percent interest in the company.

The Kearl oil sands area is estimated to contain 4.6 billion barrels of recoverable oil.

The project is targeted to produce 100,000 barrels a day in 2011, eventually ramping up to more than 300,000 barrels a day.

Imperial spokesman Gordon Wong said the company was confident Kearl will come to fruition.

"From where we stand, Kearl is an important project. This decision doesn't change that," he said.

Wong could not say how long the project could be delayed, but in previous court filings the company has said it could be set back by a year.

"We just received the decision so I really can't speculate on the impact on the schedule," Wong said.

Sean Nixon, a lawyer for EcoJustice who represents groups opposed to the Kearl development, said he was pleased with the judge's ruling.

Alberta is home to vast reserves of oil sands, a tar-like bitumen that is extracted using mining techniques. Industry officials estimate the region could yield as much as 175 billion barrels of oil, making Canada second only to Saudi Arabia in crude oil reserves.

But the massive oil sands projects are a growing source of greenhouse gas emissions.