B.C. First Nations look at models for pipeline stake
Talks are underway with unnamed major Canadian banks on a potential financing and equity model that could see B.C. First Nations take an ownership stake in the controversial $7.4-billion Trans Mountain Pipeline expansion.
Whispering Pines First Nation Chief Michael LeBourdais said two major Canadian banks approached First Nations in March or April of this year. That was about the time Houston, Texas-based project owner Kinder Morgan issued an ultimatum that unless it had certainty it could build the project through British Columbia, it was walking away.
Since then, Prime Minister Justin Trudeau’s Liberal government has stepped in with an agreement to purchase the existing Trans Mountain Pipeline and the expansion project for $4.5 billion, a transaction expected to close in the fall. LeBourdais would not name the banks and would not say what other First Nations were involved in discussions about the idea, saying those First Nations don’t want to go public at this time and have asked him to be a spokesman.
All of Canada’s six big banks — along with another dozen international financial institutions — were involved in financing $5.5 billion in credit facilities to Kinder Morgan for the construction of the Trans Mountain expansion.
In response to questions from Postmedia News, the Royal Bank, Toronto-Dominion and the National Bank of Canada declined to comment on whether they are involved in ownership talks with First Nations.
The Bank of Montreal, Scotiabank and CIBC did not respond to requests for comment.
The Trans Mountain project is viewed as critical by the federal and Alberta governments and oil producers to diversify Canada’s oil export markets away from the United States, in particular opening up new markets for Alberta oilsands in Asia.
Tripling pipeline capacity with the twinning project will significantly increase ocean-going shipment capacity from an expanded Burnaby terminus.
There are First Nations — including the Tsleil-Waututh, Sto:lo and Stk’emlupsemc te Secwepemc — that are adamantly opposed to the project. A critical Federal Court challenge led by those First Nations is also pending.
LeBourdais said he has had discussions with as many as 27 First Nations along the pipeline route, the majority of them in B.C., including in the Fraser Valley, along the Coquihalla Highway, in the North Thompson region and into Edmonton. They are among 33 First Nations in B.C. and another 10 in Alberta who have already signed benefit agreements for the project valued at $400 million.
He said the whole point of buying a stake in the pipeline is to get First Nation support by taking control of the pipeline and taking responsibility for environmental oversight.
“The best way for those who are worried about the environment is to have control over the thing you fear,” said LeBourdais.
He said he has had a discussion with one First Nation opposed to the project and it was positive.
There have been discussions with the federal government and they have been positive as well, but First Nations may be a little ahead of Ottawa, said LeBourdais.
“We are a willing buyer. We need a willing seller,” he said.
At this point, First Nations are interested in a partial stake: perhaps one-third or even a majority stake, said LeBourdais.
Models of how a transaction might look are being worked out by those interested in financing and partnering on the project, he said.
Federal finance ministry officials declined to respond to questions on what would be needed for Ottawa to seriously consider a First Nations proposal.
In a statement, the finance ministry said many investors have already expressed interest in the project, including Indigenous groups, Canadian pension funds and others.
Going back more than a decade, First Nations have been in a position to take an equity stake in oil and natural gas pipelines including the $20-billion Mackenzie project through the Northwest Territories and Enbridge’s $7.9-billion Northern Gateway oil pipeline through northern B.C.
However, neither were built. Roger Harris, a consultant and former B.C. Liberal MLA who headed Aboriginal engagement for the Northern Gateway project at one point, said he believes First Nations in B.C. will be cautious about taking an ownership stake in a pipeline, in part because raising money for a purchase will likely be challenging and costly.
They also face taking on risk as owners, including financial, environmental and perhaps even social and cultural, said Harris.
If the federal government is interested in seeing First Nations ownership, it would need to provide a way to execute that ownership, perhaps through loan guarantees, said Harris.