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June 2019

Vol. 24, No.24 Week of June 16, 2019

Competition for Canadian pipeline ownership by aboriginal coalitions

Gary Park

for Petroleum News

Interest among aboriginal coalitions in buying the Trans Mountain crude pipeline system is gathering momentum ahead of the Canadian government’s expected final decision around June 18 on tripling capacity on the link between Alberta’s oil sands and tanker ports on the Pacific Coast.

The pace quickened earlier in June when a group called the Iron Coalition challenged another bidding group, Project Reconciliation, for ownership of at least 50% in the existing 300,000 barrels per day Trans Mountain pipeline and a stake in the 590,000 bpd, C$7.4 billion Trans Mountain expansion.

Iron Coalition is led by the Alexis Nakota Sioux Nation, two other First Nations and six Metis communities in northeastern Alberta.

Project Reconciliation is looking to assemble 200 First Nations and Metis (people of mixed indigenous and Euro-American ancestry) communities in Western Canada to back its bid, estimated at C$6.9 billion.

Tony Alexis, the chief of the Alexis Nakota, said that if the Iron Coalition succeeds it will be just the first stage in creating “a standard” for bidding and participating in future resource projects.

He said the initiative matches the traditional indigenous pursuit of self-sufficiency.

“The intent of any project or anything that was happening within the tribe or group was always to sustain and to grow the family, tribe and nation,” he said.

Alexis hopes that if indigenous communities in British Columbia - many of whom are among the strongest opponents of resource development - “follow our lead we can approach the federal government (which owns Trans Mountain) to negotiate the best deal.”

Although details on how the Iron Coalition financing would be structured have yet to be released, the group is exploring options that include partnerships with institutional investors such as pension funds, Alexis said.

Indigenous investment

Delbert Wapass, executive chairman of Project Reconciliation, said he does not view the Iron Coalition as a competitor.

Instead, he said, emergence of the group has shown the enthusiasm of indigenous people to improve their economic wellbeing.

Wapass said that if the aboriginal communities can overcome their economic starvation they can tackle the root causes of their poverty.

There has already been one major breakthrough, with Alberta’s Miskew Cree and Fort McKay First Nation buying 49% of a Suncor Energy oil sands storage tank for C$503 million, a transaction that was financed through a high-yield bond issued to more than a dozen investors and backed by a 25-year service agreement with Suncor.

The fact that potential buyers of Trans Mountain have surfaced is seen as clear proof that the pipeline expansion is financially viable, while putting more pressure on the Canadian government to promote meaningful economic development opportunities for indigenous communities.

The new Alberta government led by Premier Jason Kenney has created an Indigenous Opportunities Corp. to help aboriginal organizations interested in acquiring equity stakes in energy developments.

“For too long we’ve witnessed this province’s First Nations being pushed to the sidelines,” said a spokesman for Alberta Indigenous Relations Minister Rick Wilson.

Stephen Buffalo, chief executive officer of the Indian Resource Council of Canada, said the rising interest from various aboriginal groups illustrates that the prospect of aboriginal ownership in the resource sector must be taken seriously by the federal government.

However, Canada’s Finance Minister Bill Morneau has said the timing and details of selling all or part of Trans Mountain hinges on “de-risking” such a transaction, but he did not identify which conditions would have to be resolved.

- GARY PARK






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