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Fort Hills Energy Corporation Application for Fort Hills Tailings Management Plan (AER Decision 20190225A)

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Tailings Management Plan – Ready-to-Reclaim Criteria


In this decision, the AER considered Fort Hills Energy Corporation (“Fort Hills”)’ application 1881219, pursuant to section 13 of the Oil Sands Conservation Act (“OSCA”), for approval of its tailings management plan (“TMP”) for the Fort Hills oil sands mine (the “Fort Hills Mine”).

For the reasons summarized below, the AER approved Fort Hills’ application, subject to terms and conditions (the “Approval Conditions”).

Fort Hills’ Application

The Fort Hills Mine is located about 80 kilometres north of Fort McMurray, Alberta, in the Regional Municipality of Wood Buffalo.

The Fort Hills Mine started production in December 2017, and tailings placement began in the Out-of-Pit Tailings Area (“OPTA”). Fort Hills proposed to commence fluid tailings treatment and placement in the proposed Dedicated Disposal Area (“DDA”) in 2024.

Fort Hills sought approval of its TMP to 2073, ten years after the end of mine life.

Approval Discussion

The AER found that Fort Hills’ TMP presented significant risks to the achievement of the Lower Athabasca Region: Tailings Management Framework for Mineable Athabasca Oil Sands (“TMF”)’s objective and outcomes. The AER was particularly concerned that the TMP relied on a single, yet to be proven tailings treatment technology, referred to as the passive aquatic storage system (“PASS”) to create a single treated tailings deposit (the “Proposed DDA”). The Proposed DDA would not be closed until post end of mine life with a proposed closure outcome that was subject to further assessment, research, and future policy.

As a result of these concerns, the AER did not approve construction of or placement of treated tailings in the Proposed DDA. The AER stated that it first needs to be satisfied that the risks are mitigated and feasible alternative plans exist. The AER required that Fort Hills conduct a demonstration of phase 1 of the PASS technology with a terrestrial outcome. This would allow Fort Hills to obtain the necessary evidence to provide the AER with assurance of the ability of Fort Hills’ TMP to meet the TMF’s objective and outcomes.

The AER also set conditions to ensure appropriate information is captured and submitted to the AER in a timely manner to manage risk and make appropriate regulatory decisions over the course of the Fort Hills Mine.

The approval terms and conditions addressed:

(a) stakeholder and Indigenous community engagement;

(b) project-specific thresholds for fluid tailings volumes;

(c) tailings treatment technology and deposit performance plans and updates, including a plan for the demonstration, mitigation measures and research, monitoring, evaluation, and reporting; and

(d) environmental effects and implications.

Fluid Tailings Profiles and Project-Specific Thresholds

The TMF and Directive 085 require that new fluid tailings be treated and progressively reclaimed during the life of a project, with all fluid tailings ready-to-reclaim (“RTR”) within ten years of end of mine life.

The fluid tailings profile represents the volume of fluid tailings that are not RTR.

Fort Hills commenced operations in 2017 and was employing fluid tailings generation reduction measures (i.e., thickeners, enhanced beach capture). Fort Hills proposed to commence fluid tailings treatment and placement in the Proposed DDA in 2024. All new fluid tailings must be RTR within ten years of end of mine life. Fort Hills’ end of mine life is 2063.

The AER found that Fort Hills’ new fluid tailings profile did not meet the TMF’s objective, since under the proposed TMP all new fluid tailings did not achieve RTR status by 2073.

Fort Hills proposed 4 Mm3 of new fluid tailings would remain in the fluid tailings inventory in 2073. The AER modified the new fluid tailings profile, requiring Fort Hills to achieve RTR status of all new fluid tailings by 2073 and ensure compliance with the TMF.

Fort Hills was managing its fluid tailings growth through the use of thickeners and enhanced beach capture. Therefore, although tailings treatment was commencing later in the life cycle, there was a mechanism for accumulation management in place.

Although the new fluid tailing profile was authorized, the AER noted a number of concerns and uncertainties with respect to Fort Hills’ ability to achieve the new fluid tailings profile. The concerns were as follows:

(a) the actual fluid tailings accumulation would be different from the predicted volumes used to create the new fluid tailings profile;

(b) greater than expected fluid tailings accumulation might result in Fort Hills being required by the AER to undertake mitigation measures to achieve the new fluid tailings profile; and

(c) the treatment of fluid tailings and placement of fluid or treated tailings was only authorized for a demonstration.

The AER required Fort Hills to confirm its ability to meet the new fluid tailings profile when it submits an amendment application for the updated TMP by September 30, 2026, or within two years from the commencement of the demonstration, whichever occurs first.

Thresholds

The volume of accumulated fluid tailings is the primary indicator in the TMF used to manage and decrease liability and environmental risk resulting from the accumulation of fluid tailings. Triggers and a limit (collectively referred to as “thresholds”) will be set relative to the fluid tailings profiles. The thresholds will ensure that fluid tailings are not accumulating beyond a volume or at a rate that precludes operators from meeting the TMF’s objective.

The three project-specific thresholds are the profile deviation trigger, the total volume trigger, and the total volume limit:

(a) Profile deviation trigger:

(i) additional management action is required when the profile deviation trigger is exceeded;

(ii) occurs when the volume of fluid tailings is growing 20 percent faster than that approved for the profile; and

(iii) allows a five-year rolling average to account for year-over-year variability. The profile deviation trigger applies to both legacy fluid tailings and new fluid tailings profiles.

(b) Total volume trigger:

(i) occurs when the volume of fluid tailings has exceeded its approved maximum accumulation and requires additional management action; and

(ii) level is based on 100 percent of the greater of the maximum approved fluid tailings volume profile or the end of mine life target.

(c) Total volume limit:

(i) is the volume of fluid tailings above which presents an unacceptable risk to the environment and potential long-term liability; and

(ii) under the TMF is based on 140 percent of the greater of the maximum approved fluid tailings volume profile or the end of mine life target.

To allow for year-over-year variability, the AER set the profile deviation trigger for Fort Hills as a five-year rolling average of the annual profile deviation.

The AER set the total volume trigger at 125 Mm3 and the total volume limit at 175 Mm3. Fort Hills’ maximum approved fluid tailings volume is 125 Mm3, which is greater than the end of mine life target. The AER stated that it will review Fort Hills’ new fluid tailings profile in its updated TMP to ensure the project-specific thresholds are appropriate.

Treatment Technology Selection and Performance

The TMF stipulates that all fluid tailings must be treated with an accepted technology. The risks, benefits, and trade-offs associated with the proposed technology must be understood, have contingencies identified, and risks mitigated.

As a newly operating mine, Fort Hills Mine only recently began to generate tailings. These tailings are processed through thickeners and the thickened tailings produced are deposited into OPTA, with the Centre Pit Tailings Area (“CPTA”) and North Pit Tailings Area (“NPTA”) also proposed to receive thickened tailings in the future.

Fort Hills plans to continue to employ the thickeners to reduce the volume of fluid tailings generated. The thickeners are used to recover hot water from the tailings. However, the recovery of the hot water will increase the density of the thickened tailings stream, thereby reducing the volume of fluid tailings generated.

In addition, Fort Hills indicated that it intends to use enhanced beach capture. Enhanced beach capture is the placement of coarse sand tailings in areas that contain fluid tailings (i.e., OPTA, CPTA, and NPTA), which improves fines capture and reduces the volume of fluid tailings generated. Fort Hills would use enhanced beach capture whenever practical to reduce the volume of fluid tailings.

The new fluid tailings profile assumed that the thickeners and enhanced beach capture would successfully reduce fluid tailings growth.

The AER authorized the continued use of existing infrastructure, specifically the continued use of thickeners which were expected to provide a benefit to tailings management as they can decrease the volumes of fluid tailings generated.

Given the stage of Fort Hills’ operations and the limited performance data, the AER was concerned that the thickeners and enhanced beach capture might not perform as expected. In addition to affecting the projected fluid tailings volumes, and therefore the new fluid tailings profile, underperformance could impact technology treatment capacity requirements, overall site storage, and long-term reclamation outcomes.

PASS Technology – Phase 1

PASS technology has four phases. Phase 1 adds a coagulant and a flocculant to fluid tailings pumped or dredged from OPTA (or NPTA later in the mine life) prior to placement in the Proposed DDA. This phase was proposed to occur between 2024 and 2073.

The AER considered that PASS technology was still under development. The AER did not authorize the use of PASS technology, as proposed by Fort Hills, because the AER did not find sufficient evidence to support the viability of the PASS technology at the scale proposed at the Fort Hills Mine. Success of a yet to be proven tailings treatment technology must be demonstrated at a scale large enough to be representative of the Proposed DDA.

The AER required Fort Hills to conduct a demonstration of phase 1 of the PASS technology, at a scale large enough to be representative of the Proposed DDA, with a terrestrial closure outcome. Following several years of implementation of the demonstration, Fort Hills must submit an amendment application updating its TMP.

The AER found it was necessary to investigate potential end of life performance issues. The AER identified PASS uncertainties as a high risk and therefore did not permit Fort Hills to execute its TMP as proposed.

However, the AER authorized a demonstration of phase 1 of the PASS technology.

The required demonstration must be a deep deposit (approximately 40 metres) located in the South Pit. The depth should be sufficient to be representative of and allow Fort Hills to draw correlations to future proposed deposits (e.g., the Proposed DDA). Further, the deposit formed for the demonstration cannot exceed a volume of 40 Mm3 of tailings treated by the PASS technology.

The AER required Fort Hills to submit a plan for the demonstration by September 30, 2021.

Fort Hills’ demonstration research must provide timely and site-specific information with respect to

(a) the implementation and performance of phase 1 of PASS technology in a deep, in-pit deposit; and

(b) the constraints or limitations to establishing a self-sustaining terrestrial boreal forest ecosystem.

The AER only authorized the demonstration and restricted the volume of fluid tailings treated through phase 1 of the PASS technology to be placed in the South Pit to 40 Mm3. Therefore, Fort Hills was required to submit an amendment application for an updated TMP. The updated TMP is required by September 30, 2026, or within two years from the commencement of the demonstration, whichever date occurs first.

PASS Technology – Phase 2, 3, and 4

Water capping technology involves the placement of water above untreated or treated tailings for the purpose of creating a water-capped deposit as a closure landscape feature (“water-capped pit lake”). Fort Hills stated that it does not use water capping as its tailings treatment technology. Rather, Fort Hills stated that it places an aquatic cover and that the tailings deposit is aquatically closed.

However, after all treated tailings have been placed, Fort Hills plans to cap the Proposed DDA with water in phase 2 of the PASS technology process to form an aquatic closure landscape. Phase 3 is controlled water flow return and phase 4 is water return under natural flow and pit lake development.

The AER found that this was, in effect, a water-capped pit lake. The AER understood that phase 2 of the PASS technology process involves placing water above treated tailings for the purposes of creating a water-capped deposit as a closure landscape feature.

There were various uncertainties and risks associated with water capping. As a consequence, water capping is subject to further assessment, research, and future policy. Fort Hills’ approval prohibited the creation of water-capped pit lakes and phase 2, 3, and 4 activities.

Feasible Alternative

The TMF states that “…until it is determined whether or not the technology is a successful treatment method, plans will be required to consider alternatives” and “…technologies that have yet to be proven will require contingency plans for treatment, including alternative technology options for meeting requirements.”

While Fort Hills described the technologies it evaluated in determining its proposed TMP, Fort Hills did not provide an alternative to PASS technology or to creating a water-capped pit lake, indicating that it believed the plan provided the best outcome.

The AER acknowledged that Fort Hills provided descriptions of technology alternatives to PASS technology as part of application 1881219. However, the description of alternatives provided to justify the selection of PASS technology did not constitute a feasible alternative technology and implementation plan for the Fort Hills Mine. The alternative provided must meet the TMF’s outcomes and Directive 085 requirements, including RTR criteria and identification of risks and uncertainties and associated mitigation measures.

Tailings Solvent Recovery Unit Tailings

In the froth treatment plant, a paraffinic solvent is added to froth to help separate bitumen from water and solids. The water and solids (i.e., tailings) from the froth treatment plant are sent to the tailings solvent recovery unit (“TSRU”) to recover the paraffinic solvent. Once the tailings are processed by the TSRU, they are known as TSRU tailings. Although TSRU tailings generally account for less than 10 percent of the total fluid tailings generated, these tailings can pose higher environmental risks because they can contain a residual paraffinic solvent, other hydrocarbons, and sulphides.

Fort Hills proposed to place TSRU tailings in the west side of the OPTA until end of mine life (2063).

The AER was concerned with the management of TSRU tailings as these tailings pose unique risks and uncertainties. Where TSRU tailings are introducing risk, mitigation would be required.

The AER required Fort Hills to address the uncertainties with and treatment of TSRU tailings in an update on TSRU tailings management by September 30, 2023.

RTR Criteria

As stated in the TMF and Directive 085, fluid tailings are considered RTR when they have been processed with an accepted technology, placed in their final landscape position, and meet performance criteria.

RTR criteria are used to track the performance of a tailings deposit towards its ability to be reclaimed as predicted and in the time predicted. Consequently, RTR criteria are critical in evaluating trends and managing performance.

There are two subobjectives that address different aspects of performance:

• Sub-objective 1: the deposit’s physical properties are on a trajectory to support future stages of activity.

• Sub-objective 2: to minimize the effect the deposit has on the surrounding environment and ensure that it will not compromise the ability to reclaim to a locally common, diverse and self-sustaining ecosystem.

The TMF and Directive 085 allow operators to develop RTR criteria that are suitable for their type of tailings, technology, deposit, and future reclamation activities. Directive 085 provides guidance on RTR criteria and requires operators to include information that supports their choice of RTR criteria. Sub-objective 1 and Sub-objective 2 RTR Criteria

Sub-objective 1 and Sub-objective 2 RTR Criteria

Fort Hills proposed the following RTR criteria:

(a) Sub-objective 1: clay to water ratio ≥0.5 annual average basis; and

(b) Sub-objective 1 and 2: total suspended solids (TSS) ≤500 parts per million (ppm) annual average basis.

The AER authorized a demonstration only and did not authorize Fort Hills’ proposed use of PASS technology, the Proposed DDA, or the preferred aquatic outcome for the Proposed DDA, or the preferred aquatic outcome for the Proposed DDA (i.e., a water-capped pit lake). The AER did not authorize the RTR criteria as it considered it premature.

Environmental Effects and Implications

No EPEA approval air emission limits were amended as a result of the TMP.

Fort Hills did not propose to alter the existing surface water and groundwater control measures for OPTA during operations, which manage surface water and groundwater risks during the operating phase. However, the AER acknowledged that Fort Hills will expand surface water and groundwater control measures (e.g., perimeter groundwater seepage collection system) to the expanded OPTA area.

Fort Hills did not seek authorization to release water from Fort Hills Mine as part of its TMP application.

Summary

The AER did not approve construction of or placement of treated tailings in the Proposed DDA. The AER held that it must first be satisfied that the risks are mitigated and feasible alternative plans exist.

The AER required that Fort Hills conduct a demonstration of phase 1 of the PASS technology with a terrestrial reclamation outcome. The AER expects this demonstration to commence by 2024 and required that Fort Hills submit feasible alternative treatment technologies and an implementation plan by September 30, 2023.

The approval also required Fort Hills to provide an amendment application for an updated TMP by September 30, 2026, or within two years from the commencement of the demonstration, whichever date occurs first.

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