Montreal, Canada

The Alberta provincial government is borrowing a page from Bolivia, Venezuela and other countries that have a bad habit of changing the rules in accordance with their own domestic policies.

But this time, pandering on behalf of the greens was just too much.

On Tuesday, the province announced new measures to “set aside” (aka seize) about 20% of Alberta’s oil sand’s development to protect wildlife and forests. The move set alarm bells ringing in the energy patch as the effective land-grab strips some production away from some of Canada’s biggest oil sands companies and foreign oil giants. Shares of Suncor, Canadian Oil Sands and Nexen all declined on Tuesday.

Under tremendous pressure from environmental rights groups and foreign governments, Alberta is responding to the conservationists.

The tar sands have received a barrage of negative press over the last few years as environmentalists drive home the message about its destructive extraction process. Even the United States has threatened to reduce its dependence on Canada’s “dirty oil.”

The oil sands include a vast expanse of land in northern Alberta derived from bitumen. The sandy, tar-like oil that’s trapped in the sands requires an elaborate extraction process that’s expensive, environmentally destructive and garnering the wrong kind of international press that Albertans wish to avoid.

To make the tar sands economically viable, oil prices need to fetch at least $35 to $40 a barrel. And with prices north of $108 a barrel now, it’s one heck of a lucrative business. Everyone wants a piece of the action, including the Chinese.

It’s still too early to fully interpret how this new legislation will impact companies operating in the region. I suspect it won’t do too much harm to future earnings, provided the Alberta government can compromise on where it plans to seize land.

Alberta’s decision to effectively confiscate private property opens a new chapter in Canada and other mature economies. Until now, the oil-grab was largely an emerging market government phenomenon. Not anymore.