The Alberta Energy Regulator gave on Tuesday its conditional approval application of Athabasca Oil Corp for the Dover Oil Sands Project despite a request by the Fort McKay First Nation for a 20-kilometre no-development setback.

Once Athabasca gets the green light from the provincial government and environmental clearance, Athabasca is expected to sell its 40 per cent stake in the project to PetroChina for $1.3 billion. PetroChina has 30 days to deicide if it would exercise he option to buy the 40 per cent stakes.

News of the conditional approval led to Athabasca shares increasing by 12 per cent and closed at $8.30 on the Toronto Stock Exchange.

"We are pleased to receive this fair ruling from the new Alberta Energy Regulator, which was determined through a balanced consultation and hearing process," said Brion Energy Corp President and Chief Executive Zhiming Li in a statement. Brion is the operating company for the Dover projects.

However, The Fort McKay First Nation Chief Jim Bouche said the Aborigine community would fight to stop the oil sands project, claiming the 600-member community was deprived of its constitutional right to be consulted on resource development.

"We need to think about what will be left for our children and our grandchildren, What that in mind, we've indicated to the government on a number of occasions that we need to find protection zones for our community and for the people in this region so we have a place to go," Mr Boucher said.

He estimated that at the pace development is occurring around their community, it would lose about 60 per cent of the territory.

The regulatory body, in its decision excluding the reserves as part of a buffer zone, said it would be economically detrimental to the province and municipality and not in the public interest if it gave in to the First Nation condition.

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