Vol. 25, No.39 Week of September 27, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

A seat at the table

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Six Alberta First Nations get loan guarantee for stake in gas-fired power plant

Gary Park

for Petroleum News

A pledge last year by Alberta Premier Jason Kenney to promote First Nations equity stakes in natural resource development has turned into action.

Acting through the Alberta Indigenous Opportunities Corp., AIOC, the government will provide a C$93 million loan guarantee for six First Nations to join the C$1.5 billion Cascade Power Project, now under construction near Edson in west-central Alberta.

The natural gas-fired generating facility is viewed by its partners as the foundation for eventually producing 8% of Alberta’s average electricity demand.

It is currently scheduled to start operations at 900 megawatts in 2023.

“This marks the beginning of a new era of Indigenous partnership and economic development,” said AIOC Chief Executive Officer Alicia DuBois.

But she noted that the recipients of loan guarantees have an obligation to prove that their projects are viable.

Under the agreement, the six First Nations will acquire an undisclosed stake in the Cascade project.

Kenney said “it’s a critical imperative for Alberta that we see First Nations playing a real leadership role with an equity stake in resource projects if there’s going to be a vital future for our resource industries.”

Reconciliation goal

He believes full participation by Indigenous people in the Alberta economy should be the ultimate goal of reconciliation between the ruling governments and First Nations.

“What we’re witnessing is the long overdue Indigenous liberation from unemployment and poverty, which must be the moral cause of our time,” Kenney said.

AIOC is weighing a number of other possible deals as it chooses targets for allocating C$1 billion for various forms of support up to a maximum of C$250 million per project.

Calgary-based Kineticor Resources is developing and will operate Cascade joined by Ontario-based pension fund OPTrust, along with Axium Infrastructure and DIF Capital Partners.

Kineticor has said Cascade will be the most efficient power plant in Alberta, producing 60% less greenhouse gas emissions than the coal-fired plants that have dominated Alberta’s power supplies for decades.

A report by investment dealer Peters & Co. said Cascade and a new co-generation project by Suncor Energy will create new competition in the power market, adding 1,700 megawatts of new capacity in Alberta over the next few years.

Chief Tony Alexis of the Alexis Nakota Sioux Nation - also a partner in Cascade - said he hopes the deal will become “a national blueprint for how major energy projects, like the Trans Mountain pipeline and other projects, can be structured and financed and on commercial terms to include Indigenous people.”

The Canadian government has previously hinted it will consider an Indigenous ownership share in Trans Mountain once the expanded crude pipeline is sold back to the private sector after completion of work to triple capacity to 890,000 barrels per day of bitumen is completed in late 2023.

Climate change challenge

However, against that ray of hope clouds are building as the government of Prime Minister Justin Trudeau develops a strategy for tackling climate change, which some fear could undermine efforts to advance natural resource development.

Heather Exner-Pirot, research adviser to the Indigenous Resource Network, said 38 Indigenous reservations currently produce oil and gas and 108 have agreements with producing companies, which have generated C$1.29 billion in direct royalties over the last decade, while aboriginal people account for almost 8% of those who work in extraction.

“The path to Indigenous economic self-determination runs inevitably through resource extraction and business development,” she said.

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