Providing coverage of Alaska and northern Canada's oil and gas industry
January 2013

Vol. 18, No. 1 Week of January 06, 2013

1st Nations wield clout

Stage protests across Canada, serve notice money no longer overcomes opposition


For Petroleum News

Acting under a common rallying cry of Idle No More, thousands of aboriginals have participated in rolling protests across Canada over the past month, staging flash mobs, a hunger strike by an Ontario chief, a rail blockade and sustained social media campaigns.

It’s the culmination of a year in which First Nations drew strength from 170 court victories that give them a decisive say in how natural resources are accessed and developed in every region of the country and points to even more pivotal action in 2013 that could, among other issues, determine the future of plans by Enbridge and Kinder Morgan to export oil sands bitumen to Asia.

The message was delivered in early December by Ellis Ross, chief councilor of the Haisla First Nation in northwestern British Columbia, to a business-First Nations symposium in Vancouver.

The session was a joint undertaking by the B.C. Business Council and the B.C. Aboriginal and Investment Council — itself a clear signal of a rapidly-changing environment — as a prelude to the release in March of case studies involving First Nations and the business community.

Perhaps as much as any Native leader, Ross is described as occupying the crossroads of some of Canada’s biggest energy and international commerce ambitions.

If the projects, estimated to cost tens of billions of dollars, get regulatory approval and corporate sanctioning they will far surpass any investment British Columbia has seen in the mining, lumber and fishing industries.

And the Haisla have control over a large chunk of the land that about 20 of those projects will need.

Roger Harris, a Vancouver consultant, told the Globe and Mail that how Ross “decides to address these projects and the guidance he provides and the leadership on that front, will dictate (Canada’s) national energy policy for 30 years.”

In a quiet, measured fashion, Ross has emerged as one of Canada’s most influential voices, whether he speaks for First Nations or industry.

Bottom line not money

His fundamental message is that the business aspirations of First Nations embrace environmental, social and cultural issues. The bottom line is not money.

“If you address First Nations on their level, it does lead to a successful project,” he told the Vancouver Sun. “There are ways to talk to First Nations, to interact with them and negotiate with them and that’s what we want to highlight.”

Ross said that 10 years ago the only voice First Nations had was in the courts and “nobody wins in the courts.”

“There is an economic component to economic development that’s covered off in aboriginal rights and title case law, but that’s not really the approach at all that First Nations take.

“The Haisla, for example, want to see the environmental question answered first and foremost before you even discuss other issues.

“And that’s where some companies make a mistake in thinking all we are looking for is a pay check,” he said, in a blunt reference to Enbridge’s offer of revenues from Northern Gateway to First Nations, along with setting a rigid deadline for accepting the offer.

Ross makes a point of including his telephone number in speeches to business groups to demonstrate that he is ready to do business through joint ventures, partnerships and other means, so long as the Haisla’s fundamental concerns are addressed.

Territory surrounds Kitimat

The Haisla territory surrounds Kitimat, the tanker terminal and deepwater port that holds the ultimate key to exporting bitumen and LNG.

Today, the Haisla collect C$4 million a year from the partnership of Kitimat LNG, once made up of Apache as operator, with Encana and EOG Resources as minority partners, and now headed for a 50-50 joint venture by Chevron as the new operator and Apache.

If the new ownership can move the project from neutral to full-speed ahead and start shipping LNG by late this decade, the Haisla could qualify for C$15 million to C$20 million a year, having already sold a land ownership option to Kitimat for C$58 million.

The Haisla also have a 50 percent stake in the smaller BC LNG Export Co-operative, which along with Kitimat hold the only two LNG export permits issued so far by the National Energy Board.

They also anticipate returns from the Canada LNG project, which has Royal Dutch Shell as 40 percent operator with three Asian firms sharing the balance.

In addition, the Haisla have a land deal with Rio Tinto Alcan for a smelter in the Kitimat area and have a legal say in what happens to land along the Douglas Channel out of Kitimat.

Although he has little post-high school training, Ross is viewed as having expertise in First Nations’ rights to match any in the legal community and is demonstrating skill in negotiating business deals which he hopes will allow the Haisla to regain ownership of their land that was sacrificed after white settlers moved into the area.

December rift

But within British Columbia’s often fractious aboriginal communities, not everyone shares the Haisla approach, resulting in a December rift when the Haisla broke away from Coastal First Nations, an advocacy group representing a dozen communities that has opposed some of the LNG plants in the works for Kitimat.

“What we’re working on is a way to create C$40 million worth of revenue coming out of these projects that could be shared among the northwest First Nations,” said Ross. “We thought we were on the same page.”

However, the Haisla were caught off guard when the Coastal coalition, without any previous discussion, raised concerns about air pollution from the Kitimat and BC LNG plants and accused the Haisla of “buddying” with Canada’s Natural Resources Minister Joe Oliver.

Bill Gallagher, a former Canadian government regulator, oil and gas lawyer and Native treaty negotiator, has no doubt that before mining, forestry and pipeline projects can move ahead an accommodation must be found with First Nations.

“The current situation in terms of access to resources, with the overarching tensions, has become unsustainable,” he told the Financial Post. “This is the key to the whole thing, Recognizing that Plan A has not worked; let’s put a Plan B together.

“As long as industry keeps pushing projects in the regulatory process and lawyers are doing all of the speaking, the element of trust never gels,” Gallagher said. “The process is seen as stacked in favor of industry and you have these constant challenges.”

He credits oil sands giants Suncor Energy and Syncrude Canada with taking the right path and now employing thousands of aboriginals and supporting aboriginal enterprises.

Gallagher said the high-profile national debates over oil sands expansion and export pipelines could result in new approaches, given that the proposed pipelines are “running directly into powerful legal precedents.”

He said too many of the proponents “may have got the geology right, the geography right and even the marine patterns to some extent right, but they have missed the Native empowerment landscape.”

Gallagher warned that the alternative will see projects scuttled, confrontation dominate the debate and billions of dollars wasted in real and missed opportunity costs.

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