Canada warns Suncor on environmental impact from proposed oil sands project

By Nia Williams

CALGARY, Alberta (Reuters) -The Canadian government on Wednesday warned Suncor Energy that the environmental impact from a proposed extension to its oil sands base mine in northern Alberta would be "unacceptable" as it currently stands.

Calgary-based Suncor was also granted a nine-month extension to a deadline to submit an impact statement for the project near Fort McMurray.

The base mine extension project is in the early stages of development and is being considered as a way to sustain bitumen supply to Suncor's Base Plant facility as resources in the current mines are depleted, according to Suncor's website.

Suncor, like the Canadian government, has pledged to reach net-zero emissions by 2050, although Justin Trudeau's Liberal government has a more ambitious target of cutting emissions 40-45% below 2005 levels by 2030.

Oil and gas is Canada's highest-polluting sector, accounting for 26% of emissions.

The base mine extension would produce up to 225,000 barrels per day over a 25-year period, and emit an estimated three million tonnes of climate-warming greenhouse gases a year.

In a letter to Suncor Chief Executive Mark Little, Environment Minister Steven Guilbeault said in his opinion the project as currently proposed would likely cause unacceptable environmental effects.

"Emissions at this level may not align with the pace and scale of emissions reductions required to achieve our targets, and this would hinder Canada's international commitments in respect of climate change," Guilbeault wrote.

The letter was posted to the website of the Impact Assessment Agency of Canada (IAAC), the body that reviews major projects, the same day Guilbeault approved the Bay du Nord offshore oil project, overriding concerns from climate campaigners.

Suncor said it had requested the extension on the base mine proposal to meet additional IAAC requirements, consider feedback from stakeholders and ensure it uses the best available technology.

"We're taking more time to improve the project in alignment with our strategy which includes meeting our emissions reduction ambition to be net zero," spokeswoman Sneh Seetal said in an email.

(Reporting by Nia WilliamsEditing by Chris Reese and Leslie Adler)