Page 60 - Azerbaijan State University of Economics

Fariz A. Guliyev: The economics of financial securities for environmental obligations and
their impact in royalty revenues from Alberta oil sands in North America

fashion until the final reclamation certificate is received). In 2011, Canada has adopted new

accounting standards under IFRS to account for liability provisions. Stemming from new adoption
the Other Liability provision encapsulates any inconsistencies between the two standards.

Table 2. Differences between financial security deposits (The table is initially provided at
page 24 (Alberta Environment MFSP Guide 2011)

Base Security Asset Safety Operating Life Deposit - Outstanding
Deposit - BSD Factor Deposit – OLD Reclamation
ASFD Deposit – ORD

Risk Approval Approval Holder`s Approval Holder`s resource Approval Holder is
addressed Holder MFSP Asset value base is nearing the end of its not progressively
unexpectedly falls below 3 times life. reclaiming land that
defaults. their MFSP has been scheduled
Liability. for reclamation.

Main Complexity of MFSP Asset, MFSP Reserves and sales rate Reclamation
Factor the sector Liability and any represented by Reserve Life performance based on
BSD and OLD Index (RLI) for sites with both Current Mine
AENV and ERCB approvals Reclamation Plan

Deposit On the basis On the basis of each On the basis of each EPEA On the basis of each
calculation of each EPEA EPEA approval approval EPEA approval
basis approval

Deposit Lump Sum Lump Sum for the Phased-in over 10 years, Lump Sum for un-
payment shortfall adjusted for BSD reclaimed land

Deposit Amount does The Adjusted Asset MFSP Liability is reduced OR When the Approval
reduced not decrease Safety Factor is Reserves added to bring the Holder reduces the
when… until the MFSP equal to or greater reserve life equal to or greater Cumulative
Liability falls than 3.00. This than 6.00 (partial recovery) or Reclamation Balance.
below the BSD factor is calculated equal to or greater than 15.00
each year. (full return).
Source: Alberta Environment 2011

As it was initially described in section 1.2 (Types of Financial Security Deposits) requirements for

additional security deposits describe certain triggers about the nature of such payments:

Base Security Deposit (BSD)

Oil sands mines are required to provide a Base Security Deposit in accordance with the

following table:

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