OTTAWA – Canada said on Tuesday it will design a system to better monitor whether northern Alberta's huge oil sands projects are polluting waterways after an independent scientific panel found major flaws in the current monitoring system.

Environment Minister John Baird made the announcement after the panel reported "there was no evidence of science leadership to ensure that monitoring and research activities are planned and performed in a coordinated way."

Ottawa set up the scientific panel in September after an academic report concluded oil sands plants were sending toxins, including mercury, arsenic and lead, into the watershed. The report also attacked the credibility of a government-supported and industry-funded water-monitoring agency.

"For far too long we have heard concerns about the quality of water downstream of the oil sands," Baird told a news conference, saying Ottawa and the Alberta provincial government would design an effective water monitoring system within 90 days.

"We will then consult with a group of independent scientists to ensure that the proposed design is appropriate and then move immediately to implementation," he said.

The panel's report is not expected to have any immediate impact on production in oil sands, the largest source of crude outside Saudi Arabia.

The energy industry is pouring billions of dollars into developing the oil sands, and argues it follows environmental best practices. Environmentalists say the projects produce vast amounts of greenhouse gases and toxic waste.

The panel said current problems include fragmentation of the monitoring system as well as a lack of leadership and coordination.

"Until this situation is fixed there will continue to be uncertainty and public distrust in the environmental performance of the oil sands industry and government oversight," it said.

The panel stopped short of concluding that the oil sands were polluting waters in Alberta. It also did not say further development should be restricted.

Output from the region, the largest single source of U.S. oil imports, is expected to about double to 3 million barrels a day by 2020.

The extra production will come from new projects and the expansion of existing facilities run by Royal Dutch Shell Plc, Total SA, Suncor Energy Inc, and ConocoPhillips among others.

Nathan Lemphers of the Pembina Institute green group said it was tough to know whether 90 days would be enough to design a proper monitoring network.

"This is just an announcement. It's important to keep that in perspective," he told the Canadian Broadcasting Corp.