Oil and gas companies that work in First Nations territory without making aboriginal communities a partner are missing a great business opportunity and jeopardizing their projects, industry players say.
And to help First Nations develop their own oil and gas resources, the Indian Resource Council of Canada (IRC Inc.) and the Indian Business Corporation have just announced the first-ever national Indian resource capital fund.
The two organizations have committed a total of $1 million to the fund and the federal government has contributed $2 million.
Fund managers hope to raise an additional $7 million from private investors, through the sale of units at $100,000 per unit, by the end of next January, said IRC president and CEO Roy Fox, a former chief of the Blood tribe in southern Alberta.
“We hope to prove to everyone, especially ourselves, that this is certainly a viable way of raising money so that more of our people and their business entities can participate in the business aspect of the resource sector,” Fox said at an aboriginal energy and resource development conference held in Calgary last week.
The fund will be managed by a wholly owned subsidiary of IRC, a national group formed in 1987 by First Nations chiefs to act as a watchdog to the federal Indian Oil and Gas agency.
The fund’s initial focus will be to provide a source of capital for First Nations and aboriginal businesses to explore for, and produce, oil and gas resources on their land, Fox said, adding: “A bigger fund is being contemplated for the future.”
The oilpatch not only has a moral responsibility to involve native people in projects that affect them, recent Supreme Court of Canada rulings affirming aboriginal fishing and hunting rights on traditional territory make it a legal obligation, participants said at the conference.
“If companies want to do business in traditional territories, the Supreme Court of Canada says they have to consult, they have to accommodate,” said Calvin Helin, president and CEO of the Native Investment & Trade Association (NITA).
“Aboriginal people not only want to be heard and have their concerns addressed, they want to be players,” he told Business Edge at the NITA Resource Expo 2003 conference held last week.
“Industry is learning, and learning quickly, that this is simply the right thing to do,” said Rob Hunt, senior vice-president of Calgary-based Akita Drilling Ltd., recognized as an industry leader in partnering with aboriginal communities in northern Canada.
Establishing such partnerships, however, “is long term, and it requires great commitment from the board level right through management and middle management to on-the-ground people,” Hunt said. “You’re either in or you’re out.”
Supreme Court rulings have essentially given aboriginal communities across Canada a veto on any resource project in their traditional territory, says Robert Laboucane, president of Ripple Effects Ltd., a Calgary-based company that does aboriginal awareness training for corporations – including many oilpatch majors.
“You either negotiate a mutually beneficial agreement or there is no project,” he said in an interview. Laboucane pointed to companies including Akita Drilling, Shell Canada, TransCanada Corp., Suncor, EnCana Corp., and Syncrude as leaders in the oil and gas industry in forging meaningful relationships with First Nations.
Akita, for example, has partnered with the Inuvialuit Development Corp. (IDC) in Akita-Equtak Drilling Ltd., to build, own and operate Akita’s Arctic drilling rigs. Three other joint ventures with aboriginal communities – Akita-Sahcho Drilling Ltd., Akita-Sahtu Drilling Ltd. and Akita-Kaska – have opened up drilling prospects in the N.W.T, northern B.C., the Yukon and the central Mackenzie River region.
EnCana, which does $70-$80 million a year in business with aboriginal companies, has teamed up in a similar venture with the Dene Tha’ First Nation, the Metis Nation of Alberta Association and Lakota Drilling Inc.
At Suncor, aboriginal people comprise more than 10 per cent of the workforce, up from just two per cent in 1995. The goal is to bring that figure to at least 12 per cent, said Heather Kennedy, VP of human resources and community affairs at Suncor.
TransCanada, in each of its operating regions, employs a community and aboriginal relations liaison who is dedicated to developing economic, educational and social opportunities with aboriginal communities in their local area.
Syncrude bought $92 million in goods and services from aboriginal businesses in 2001.
Oilsands firms in the Fort McMurray area did about $400 million in business with aboriginal companies last year, which is expected to increase to a half-billion dollars next year, noted Helin from NITA.
“This is where the action is.”
First Nations are also pushing for changes to federal policies and legislation, including the Indian Act, that prevent them from directly controlling and developing their own oil and gas resources.
Indian Oil and Gas Canada, a federal agency, has for years managed these resources on behalf of aboriginal people.
About 120 First Nations across Canada have some sort of oil and gas deposits on their lands.
However, with First Nations monies held in trust by Ottawa, aboriginal communities often don’t have access to lines of credit and bank loans that are available to non- aboriginal businesses, says the IRC’s Fox. Government and industry also need to boost investment in training and education for aboriginal people, conference participants said.
NITA’s Helin noted that three to five million skilled Canadian workers will be retiring from the workforce within the next five years, while there will be nearly one million young aboriginal people of employable age by 2006.
“Does Canada want to be competitive and prosperous as it has been in the past?” Helin said. “The only way that we can do that is if we all work together.”
