Pushing pipeline ownership onto First Nations

May 8, 2023

In 2018, Husky Energy asked Stephen Mason, who has years of experience developing oil and gas projects on the African continent, to get First Nations together to put in a bid to buy the Trans Mountain Expansion (TMX) Pipeline. Husky, which has since been bought by Cenovus, had already booked space on the yet-to-be-built pipeline to get its oil from Alberta to the Pacific coast, where it could sell at higher prices. 

Mason, a non-Indigenous man, is now a driving force behind Project Reconciliation, one of three coalitions vying to buy TMX from the federal government and put it under partial or full Indigenous ownership. One of the other coalitions, Chinook Pathways, is a partnership between the recently formed Western Indigenous Pipeline Group and existing giant Pembina Pipeline Corporation.

This kind of deal is different than the typical “benefit agreements” where a company pays a band council a fee to operate on Indigenous territory. “Ownership” instead involves band councils owning shares in a company like the TMX corporation. This means the band councils have a greater investment in the project – they are literally bought in – and so have more incentive to ensure the project is financially successful.

The federal government, which fought several First Nations opposing TMX in court, has been trying to sell the pipeline to Indigenous groups since at least 2019. And TMX is just one example of the recent push by industry, government, and some Indigenous leaders for Indigenous investment in resource extraction projects. 

A new path for the same old projects

It’s January 2020. The Vancouver Convention Centre is host to nearly 700 people gathered for “The Declaration: Finding the Path,” the inaugural Indigenous Partnerships Success Showcase. 

Attendees include a mix of Indigenous leaders, mostly from B.C., and resource industry staff and executives. On the sponsors list: the Canadian Association of Petroleum Producers, Enbridge, the federal-government-owned pipeline company TransMountain, Project Reconciliation, and more. 

Resource Works, a resource industry advocacy organization, is putting on the event, in association with Indigenous business groups, including the First Nations Major Projects Coalition, which was established in 2015. 

“The Declaration” in the conference title refers to the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). Resource industries were concerned about the declaration because, two months earlier in November 2019, the B.C. NDP passed legislation that made UNDRIP part of B.C. law. They didn’t know what this would mean for their businesses, especially on the question of Indigenous consent. The conference features a legal panel on that question, with the lawyers agreeing that it is good for First Nations to be able to say yes or no to projects but, in their legal opinions, Canada still makes the final decisions.

The conference happened when the oil and gas industry had, in their eyes, recently lost several pipeline fights, including Energy East (a TC Energy project) in 2017, Northern Gateway (Enbridge) in 2016, and Keystone XL (TC Energy) in 2015. 

Enbridge managed to build the Dakota Access Pipeline (DAPL) despite opposition from Indigenous peoples from Standing Rock and beyond and the historic #NoDAPL movement, but only by using incredible force and violence carried out by private security and many branches of the U.S. police and military complex. Enbridge also faced fierce Indigenous opposition in 2021 south of the border while building its Line 3 Pipeline, an oil sands export line.

If Indigenous communities invest in a resource project, industry gets the benefit of calling these investments “economic reconciliation” – even if not all First Nations along the pipeline route consent.

TC Energy’s Coastal GasLink Pipeline was, in January 2020, a huge question mark. For industry, it is an important piece of infrastructure to open the Montney gas formation in northern B.C. and Alberta up to fracking and to export that product to the world through the LNG Canada facility being built on the west coast.

As he watches this all unfold, long-time Union of British Columbia Indian Chiefs (UBCIC) Grand Chief Stewart Phillip tells Briarpatch he believes “the issue of consent loomed very large in these matters” of industry pursuing Indigenous ownership deals. 

He points to several Supreme Court of Canada cases, like Tsilqhot’in in 2014, which reaffirmed Indigenous rights and title to vast tracts of land in so-called Canada.

“The most important thing to bear in mind is the proper title holders are the entire population of a tribal group, not the band councils alone.” 

Band councils are a municipal-style governance system imposed on First Nations by the Canadian government in an effort to eradicate traditional governance systems. Settler governments and industry have often done business with band councils rather than the traditional governments. 

“These [new ownership] arrangements,” Phillip explains, “are between willing band councils and the oil companies.” He points to the Coastal GasLink project in Wet’suwet’en territory, where band councils approved the pipeline but the Hereditary Chiefs never consented. “Wet’suwet’en is a prime example of that dynamic. We’ve all witnessed the violence and the efforts of Coastal GasLink to violently suppress the opposition to the Coastal GasLink Pipeline against Wet’suwet’en people.” 

This means the band councils have a greater investment in the project – they are literally bought in – and so have more incentive to ensure the project is financially successful.

In January 2019, the RCMP conducted an armed raid on Wet’suwet’en land defenders and then construction had to shut down for a month. Attendees at “The Declaration: Finding A Path” conference may not have known it at the time, but the Wet’suwet’en Hereditary Chiefs had issued an eviction notice to Coastal GasLink earlier that month, January 2020. The RCMP was about to respond with another raid in February 2020, and train travel in Canada would almost be ground to a complete halt by the #ShutDownCanada protest movement in retaliation. 

Coastal GasLink was a prominent topic of conversation at the conference. Earlier, in 2019, TC Energy had set aside 10 per cent of the ownership of Coastal GasLink for Indigenous groups. Three years later, in March 2022, TC Energy announced it had reached an agreement to sell that 10 per cent stake to 16 First Nation band councils upon completion of the project. Among those are most, but not all, of the band councils located in Wet’suwet’en territory. The Wet’suwet’en traditional hereditary government, which governs the entire territory, continues to not consent to the pipeline.

With resource projects failing due to a combination of direct action, mass movements, court challenges, scandals, political whims, and market conditions, industry has lined up behind this new business approach. Their goal remains: make projects happen and make money doing it. Sharing some of that money with Indigenous people is preferable for these companies compared to the alternative of the projects not happening at all.

“I think the motive behind the oil and gas companies engaging First Nations involvement from a business perspective in these large scale projects is self-serving,” says Grand Chief Phillip. “The oil companies believe that engaging First Nations is simply another way to greenwash their projects and the terrible impacts they have on the environment, on the rivers and ecosystems.” 

Alberta presses the accelerator

The United Conservative Party (UCP) in Alberta set up a new Crown corporation in 2019, the year they were elected, called the Alberta Indigenous Opportunities Corporation (AIOC).  Its mandate is to give out loans with favourable conditions to First Nations and Métis settlements to encourage them to buy into resource projects. 

AOIC’s first loan was to six First Nations to become part owners in a new fossil gas-fired power plant. As the accompanying press release in 2020 stated, “With up to $1 billion in loan guarantees, the AIOC helps reduce the cost of capital for Indigenous groups and makes it easier to raise capital to invest in natural resource projects.” 

The AIOC really sprang into the spotlight with its pipeline financing. In September 2021, anchored by an AIOC loan, three First Nations and five Métis Settlement councils partnered with Suncor to buy a 15 per cent stake from TC Energy’s Northern Courier Pipeline north of Fort McMurray, Alberta. 

And in September 2022, 23 First Nation and Métis communities took an 11.57 per cent interest in seven Enbridge-operated pipelines in the Athabasca region of northern Alberta for $1.12 billion, with financing from the AIOC. 

These communities are structurally impoverished by settler governments. They almost never get this type of deal handed to them, and they need the money.

These loans come with what is called “non-recourse” financing. With the Enbridge deal, the AIOC provided a $250 million loan. That initial loan helped secure another $800+ million in private, non-recourse financing, meaning the band councils don’t have to put up any collateral. Another new organization, Athabasca Indigenous Investments, helped arrange the deal between Enbridge, the lenders (with RBC Capital Markets serving as financial advisor), and the band councils. The result was that the 23 councils did not have to put any of their own money down, and they will get a share of annual profits from the operation of the pipelines. 

After Enbridge put on a charm offensive visiting the communities, the 23 councils agreed to the deal, though there was some reluctance from community members. 

Athabasca Indigenous Investments president Justin Bourque told BNN Bloomberg, “I believe that this deal is a model to be sought after, to be looked at, and to be replicated into the future. I think, you know, Enbridge has a lot of ability within their own corporation to replicate that but I think that industry in general will all be able to learn from this type of deal structuring as well.” 

These communities are structurally impoverished by settler governments. They almost never get this type of deal handed to them, and they need the money.

Industry's goal remains: make projects happen and make money doing it. Sharing some of that money with Indigenous people is preferable for these companies compared to the alternative of the projects not happening at all.

At the September 2022 press conference about the investment in the Enbridge pipelines, Chief Greg Desjarlais of Frog Lake First Nation mentioned that revenue generated from the pipelines would go to supporting health care, education, and housing. 

Former Alberta premier Jason Kenney has recently been an evangelist for the AIOC loan model, trying to get other settler governments across the country to adopt it as a way to foster Indigenous ownership in resource projects. 

The federal government’s new budget, unveiled in March 2023, was criticized by the Assembly of First Nations for not investing in needed infrastructure. The budget mentions that the Canada Infrastructure Bank will provide loans to Indigenous communities to support them in purchasing equity stakes in infrastructure projects in which the bank is also investing. Governments are lining up in support of a very specific sort of economic development for Indigenous communities. 

Where industry is headed 

At the Enbridge-sponsored Walrus Talk in Ottawa in March 2023 titled “Economic Reconciliation: How the private sector and government can support a brighter economic future for Indigenous peoples in Canada,” Enbridge executive vice-president Colin Gruending takes the stage. The focus of the event is Indigenous ownership of resource projects. He says that, at Enbridge, “we see it as critical to delivering future world-class projects in sectors such as crude oil, natural gas, [liquid natural gas], carbon pipelines, hydrogen pipelines, hydrogen blending facilities, solar, and wind.” 

Another speaker, Trevor Gardner, RBC Capital Markets’ co-head of Canadian investment banking, worked on the deal to get Indigenous ownership in Enbridge pipelines in Northern Alberta. “Access to capital is strong and growing,” for these kinds of projects, he says. “Investors have seen the attributes of these transactions, they understand the framework, and they’re excited to participate.”

The draw here, for investors, is that if they see Indigenous communities investing in a resource project, they think it has a good chance of success, so they’ll be more confident about putting their money into it. They also get the benefit of calling these investments “economic reconciliation” – even if not all First Nations along the pipeline route consent to the pipeline and are still being cleared from its route at gunpoint.

“The oil companies believe that engaging First Nations is simply another way to greenwash their projects and the terrible impacts they have on the environment, on the rivers and ecosystems.” 

Canada’s oil sands industry, working as the Pathways Alliance, has been approaching First Nations and Métis Settlement councils in Alberta about carbon pipelines. This is part of a scheme to continue expanding oil sands production while building government-subsidized carbon capture infrastructure. The carbon capture won’t offset most emissions from the oil produced, but industry is trying to convince the public it will, and they have run ads during sports on TV and on the front pages of newspapers. This is the subject of a Greenpeace complaint to the Competition Bureau. But we should expect announcements about Indigenous investment in these projects in the near future.

Announcements about Indigenous ownership of TMX are likely forthcoming as well. The big question there is how much of a loss the federal government will take in order to get someone else to own it. The government originally bought the pipeline for $5.4 billion, and its costs have now ballooned to an estimated over $30 billion. When the price estimate was $21 billion, one study reckoned that the government would sell it at a loss of $17 billion. That figure could now be substantially higher. 

The government will likely take a huge loss, in effect giving a huge subsidy to the oil industry so those companies can get oil to market a bit more easily. It can also be seen as funding to provide a revenue stream to First Nations that buy into the oil export pipeline, but only if they continue operating it for many years to come. 

“I would much rather see Indigenous groups look at clean energy, green energy, energy that features renewable resources. I think there’s an opportunity to get in on the ground floor of that inevitable shift and meet our energy needs.” 

“[It’s] clear that the Trudeau government is very much in the pocket of oil and gas,” says Grand Chief Phillip.

Whatever you think of Indigenous ownership of resource industries, with the breadth of support it has from governments and the most powerful industries in Canada, it’s clear that it will only become more frequent in the coming years.

For Grand Chief Phillip, instead of locking into ownership of oil and gas infrastructure, “I would much rather see Indigenous groups look at clean energy, green energy, energy that features renewable resources. I think there’s an opportunity to get in on the ground floor of that inevitable shift and meet our energy needs, as opposed to investing in an industry that is on the decline. Regardless of the efforts of oil and gas and governments and the grandiose public relations campaigns, it is what it is.” 

“At the end of the day, in order to survive, we’re going to be forced to abandon oil and gas and I do not believe in [the current] government and industry rhetoric about a major transition or transformations. These decisions need to be made now, they need to be decisive, and we need to begin the very difficult work.”

[Top: Illustration - Amanda Priebe]