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Pipelines on bumpy road Three major plans to move oil sands bitumen from Alberta to Canada’s West and East Coasts all face opposition from First Nations Gary Park For Petroleum News
Whatever faint hopes Canada’s pipeline companies might have held that one major oil sands export venture would make a smooth passage through the regulatory process have been dashed.
First Nations have now taken a rigid stance against all three projects within Canada that are designed to ship up to 2.5 million barrels per day of crude bitumen to refineries in Ontario and Quebec and to offshore markets.
The final piece was moved into place in May when 70 First Nations leaders agreed to develop a strategy to derail TransCanada’s proposal to build its Energy East pipeline to deliver 1.1 million bpd of oil sands production to domestic refineries and through tanker terminals in New Brunswick and Quebec to Europe and possibly Asia.
That poses a challenge to the long-held expectation that Canada could become an energy superpower by developing 168 billion barrels of oil sands resources by expanding sales beyond the United States.
The assumption was already in trouble with TransCanada’s Keystone XL pipeline bogged down in an increasingly fractious cross-border debate and with First Nations and environmental resistance to Enbridge’s 525,000 bpd Northern Gateway system and Kinder Morgan’s plans to triple capacity on its Trans Mountain pipeline to 890,000 bpd.
Combined with Energy East, those three undertakings represented potential new outlets for about 3.1 million bpd of bitumen.
Change of tactics TransCanada, left reeling by the crumbling hopes for XL that Chief Executive Officer Russ Girling has admitted caught his company “flat-footed” by a tidal wave of opposition, changed its tactics for Energy East.
Over the past year it has engaged on consultations with communities along the pipeline route, including about 155 First Nations, to seek their support.
It hired Phil Fontaine, a former chief of Canada’s Assembly of First Nations, as its representative at the meetings, but that failed to sway the activists.
Clayton Thomas-Muller, a Manitoba Cree, told the Globe and Mail that “dramatic pressures have been placed on the shoulders of First Nations peoples, with our constitutionally protected rights, to defend Canada’s air, water and earth from the agenda of Big Oil and other extractive industries like the mining sector and the forestry sector.”
“So it will be First Nations’ interventions and the assertion of aboriginal and treaty rights that is going to stop the plan to build” the 2,400-mile Energy East Pipeline, he said.
Thomas-Muller said Fontaine has let his business affiliations impair his judgment, although Fontaine has declared his endorsement of First Nations’ rights to oppose resource projects on their traditional territories.
Fontaine said the right of First Nations to say “No” also includes the right to say “Yes,” meaning the important decisions should be left to the aboriginal communities.
Coalition opposes Energy East However, the campaign to challenge Energy East may now be seen as irreversible, giving the creation of a loosely knit coalition to oppose the project when TransCanada submits an application to the National Energy Board by the end of summer.
Girling told reporters in May that does not expect Energy East to experience the same rough ride through the regulatory process as Keystone XL, doubting that the project can be hijacked by environmentalists under new Canadian government regulations to streamline the public hearing phase.
The difficulties faced by resource industries in winning over First Nations were captured in an article by Michael Perron for consulting firm MNP LLC.
Traditionally, he said, industry partnerships with First Nations on energy and resource ventures have involved royalty payments to the communities.
But First Nations are now looking for partnerships and community involvement and, as equity partners, are hoping to create employment opportunities to support projects as well as capacity development opportunities for their residents, Perron said.
He noted that does not follow the same path as typical industry partnerships.
Instead, First Nations require a due process, usually in the form of consultation, before they engage with industry, which means the proponents have to spend time understanding “any sensitivities, political considerations and other cultural aspects.”
On the other side, a recent report by Dwight Newman, the Canada research chair in indigenous rights in constitutional and international law at the University of Saskatchewan, said aboriginals do not have the right to veto projects, noting their high expectations are often based on misunderstandings about the law.
He said those who perpetuate misunderstandings about the “duty to consult ... are standing in the way of Canada’s future.”
“What the duty to consult does is provide protection for key aboriginal interests and create a lever to cause aboriginal communities, governments and business to come to an agreement on resource projects that benefits all parties,” Newman wrote.
Resolving those conflicting views could take years, leaving projects such as oil pipelines to wither while they wait.
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