Enbridge, Indigenous groups reach `historic' deal for 7 pipelines

Enbridge Inc. has signed an agreement with 23 First Nation and Métis communities to sell an 11.57-per-cent interest in seven pipelines located in the Athabasca region of northern Alberta for $1.12 billion.

The deal is the largest energy-related Indigenous economic partnership transaction in North America to date, the Calgary-based pipeline company said Wednesday.

A newly created entity called the Athabasca Indigenous Investments will be responsible for the investment.

“The deal is significant because it gives all 23 Indigenous communities that are directly impacted by these assets a direct stake,” said Justin Bourque, AII president. “It positioned the communities for long-term impact now and for future generations.”

He said the deal will be funded through debt and equity, with the former coming from the Alberta Indigenous Opportunities Corporation, which finances Indigenous communities seeking commercial partnerships.

Greg Desjarlais, chief of Frog Lake First Nation, described the deal as “historic” for communities in the region. “In addition to an opportunity to generate wealth for our people, this investment supports economic sovereignty for our communities,” he said.

The agreement is part of Enbridge's Indigenous reconciliation action plan, which aims to boost its relationships with Indigenous communities and staff. It also fulfils the company's goal to “recycle capital at attractive valuations,” it said.

“We believe this partnership exemplifies how Enbridge and Indigenous communities can work together,” Al Monaco, the company 's chief executive, said in the press release.

Pipelines included in the deal are the Athabasca, Wood Buffalo/athabasca Twin and associated tanks; Norlite Diluent; Waupisoo; Wood Buffalo; Woodland; and the Woodland extension. Enbridge said these assets provide “highly predictable cash flows.”

Royal Bank of Canada analyst Robert Kwan said in a note to clients after the deal was announced that the size of the transaction was not “particularly material” to Enbridge, but he described the move as positive because it advances the company's engagement with Indigenous communities.

The deal is expected to close within the next month.