Canada, Alberta seek to assuage oil sands critics

CALGARY, Alberta (Reuters) - Canada will set up a new environmental monitoring system for the northern Alberta oil sands as it seeks to fend off harsh international criticism following revelations that oversight of the huge petroleum development has been insufficient.

The federal and the Alberta provincial governments said on Friday the new plan that will boost water sampling and increase information available to the public.

They said they will take three years to implement a joint program that will continuously study the effects of developing the resource on water sources such as the Athabasca River. The program will be subject to independent scientific scrutiny.

The much-anticipated step comes as the two governments and industry push to build multibillion-dollar pipelines that would ship oil sands-derived crude to Texas and to the Pacific Coast. Both pipeline projects, TransCanada Corp's Keystone XL proposal and Enbridge Inc's Northern Gateway pipeline, face bitter opposition from environmentalists who decry the effects of the rapid development of the resource.

Canada is also battling against a proposal by the European Union to label the oil sands, the world's third-largest crude source, as inherently polluting.

"The more robust our facts and science with regards to responsible oil sands development (the more it) will allow us to counter some of the more outrageous expressions of criticism, myths and financially damaging mischaracterizations of our development of the oil sands," Peter Kent, the federal environment minister, told reporters in Edmonton, Alberta.

Kent said he is confident the energy industry will provide the increased funding for the expanded program, which is aimed at adding scientific credibility to claims that everything possible is being done to minimize environmental impact. He pegged the total cost at C$50 million ($50 million) a year.

Separate scientific panels commissioned by the two governments last year found the current monitoring system, which is backed by oil sands producers, is not capable of assessing the effects of oil sands production on the environment, especially on water.

The work was sparked by a damning 2010 study coauthored by University of Alberta ecologist David Schindler that concluded that oil sands plants were contaminating the Athabasca watershed with such toxins as mercury, arsenic and lead.

The reports of the current monitoring system had said that any pollution was naturally occurring.

The governments discussed the new plan with Schindler, Kent said.

It will include increased water sampling, frequency and parameters, and the governments will prepare annual progress reports for the first three years of implementation.

After the third year, it will undergo an external scientific peer review, and all the work will be made public, officials said.

For its part, the oil industry, which aims to nearly double oil sands output to 3 million barrels a day by 2020, said it welcomed the measures.

(Editing by Peter Galloway)