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Alberta shifts direction
Premier Jason Kenney plans to expand role of First Nations in resource projects
Gary Park for Petroleum News
The freshly minted Alberta government is ready to enter a new age of dealing with First Nations on resource projects, taking a decisive step from short-term benefits and access agreements to ownership stakes.
Premier Jason Kenney plans to establish a C$1 billion Aboriginal Opportunities Corp. that he said will provide technical support on projects and access to capital markets through loan guarantees or co-invested debt and equity lending from his government.
In addition, the corporation will provide legal and economic development to pro-development First Nations “who want to move toward being long-term strategic partners with industry and the Alberta government,” he said.
Kenney said cash for the venture would come from cancelling the previous government’s planned C$3.7 billion lease of rail cars to increase shipments of crude bitumen outside Alberta, with an initial investment of C$24 million over four years and C$1 billion earmarked for backstop financing.
‘Step in right direction’ Bill Morin, chief of the Enoch Cree Nation south of Edmonton, would not give outright support to Kenney’s plan, but he called the idea a “step in the right direction” for the Trans Mountain pipeline expansion, TMX.
Several First Nations have expressed interest in acquiring a stake in TMX since the existing pipeline was purchased by the Canadian government last August for C$4.5 billion and the budgeted C$9.3 billion expansion.
“We always wanted to buy,” said Michael LeBourdais, chair of the Western Indigenous Pipeline Group. “We always wanted equity. But in our negotiations with Kinder Morgan (the previous Trans Mountain owner), equity was not on the table. When the government of Canada bought the pipe it opened that door.”
He emphasized that First Nations were not just interested in a slice of profits from Trans Mountain; they wanted “influence and control” over the pipeline’s environmental impact through the appointment of a director.
LeBourdais’ own British Columbia First Nation of Whispering Pine/Clinton and 42 other communities have already signed agreements with Trans Mountain that are worth about C$400 million.
Others opposed to investment But Grand Chief Stewart Phillip of the Union of B.C. Indian Chiefs, warned his member First Nations against investing in Trans Mountain, claiming the operation is not profitable in its current form and that cost projections to add 590,000 barrels per day of capacity to the system have already climbed by 72%.
He also doubts the existence of an offshore market for those incremental volumes that would be carried on the expanded line in a “world where demand for oil has peaked and is declining,” while oil sands fields will be among the first to shut down because of their higher costs and carbon emissions.
LeBourdais fired back that Phillips shows an “old way of thinking” where indigenous peoples are “denied the benefits of their lands and where decisions are made without consultation.”
Control over destiny Joseph Quesnel, a program manager for aboriginal issues at the Macdonald-Laurier Institute, an independent think-tank, effectively endorsed Kenney’s strategy by arguing that governments across Canada should better facilitate and even offer incentives to First Nations to enter into equity partnerships on resource projects.
He said those deals would give First Nations “a greater ability to control their own destiny through a stake in the company’s future success.”
Listing several ventures that are breaking new ground, Quesnel mentioned two - a C$3 billion potash mine on indigenous land in Saskatchewan, and a 900-mile oil pipeline to carry 2 million barrels per day at a cost of C$12 billion from Alberta to the British Columbia, a venture proposed by Eagle Spirit Pipeline, a consortium of 35 First Nations.
He said indigenous communities “see themselves as full partners in the economy and industry and government should pay attention to that new reality.”
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