OTTAWA - Canada's massive oil sands are "the most destructive project on earth" and the federal government must intervene to clean up the mess, a leading green group said on Friday.

Environmental Defense said excavation of the oil sands in the western province of Alberta -- home to the richest petroleum deposits outside the Middle East -- is producing vast amounts of greenhouse gases and poisoning local water supplies.

"This is Canada's problem -- our federal elected leaders need to clean it up or shut it down," said Aaron Freeman of Environmental Defence.

The group called on the Conservative government to impose a firm cap on emissions from the oil sands and enforce regulations designed to prevent pollution.

The process to strip the tar-like bitumen out of the sands and turn it into synthetic crude oil is very energy intensive.

Alberta is a Conservative Party stronghold and critics say the government does not want to alienate the powerful energy industry by clamping down. Ottawa denies the charge and says a plan it unveiled last year will cut overall emissions by 20 percent from 2006 levels by 2020.

"All the major polluters, emitters of greenhouse gas emissions, will have to reduce their greenhouse gas emissions, and that includes the oil sands," said Mark Warawa, parliamentary secretary to the environment minister.

The Alberta provincial government says it has issued leases for 4,264 oil sands projects covering 25,065 square miles . New projects costing more than C$100 billion are on the books for the oil sands region and production is expected to triple to 3 million barrels a day by 2015.

($1=$1.01 Canadian)

Reporting by David Ljunggren; Editing by Peter Galloway
© 2008 Reuters