METIS NATION ‘ PREPARED’ TO SUE IF FRONTIER DENIED.

‘We are prepared,’ say Fort Mckay Métis

• An Indigenous group that stands to benefit from Teck Resources Ltd.’ s Frontier oilsands project, says it would launch a legal challenge against the federal government if it rejects the development.

“We do recognize that there are ways that we can go – and that’s one,” said Ron Quintal, president of the Fort Mckay Métis Nation, about launching a legal challenge if the Frontier project is rejected. “We are prepared.”

Quintal says the government has yet to consult with his group.

The Fort Mckay Métis is one of the 14 Indigenous groups that have signed benefits agreements with Teck; others include the Fort Mckay First Nation and the Athabasca Chipewyan First Nation.

Quintal said his group is sending the Environment and Climate Change Minister Jonathan Wilkinson a letter this week outlining his community’s concerns as Ottawa’s end- of- February deadline for a decision on the Frontier oilsands project approaches.

“From our perspective, no matter what decision is made, there needs to be consultation,” he said, adding that it’s “borderline insulting” that the federal government would look to cancel the $20.6-billion project that would directly benefit his community, then look to provide an aid package to the province more generally. The president was referring to an unconfirmed news report that Ottawa will offer Alberta a financial package as compensation for rejecting Frontier.

“We’ve already had one major industry taken from us — that’s the fur trade,” Quintal said, adding, “We want to earn our way.”

The Fort Mckay First Nation declined to comment on whether it would also launch a legal challenge if Ottawa rejects the project, but the group reiterated its support for the project.

“We believe, with necessar y government action on cumulative effects, that Frontier can strike the right balance between environmental and Treaty rights protection and create economic opportunities for Fort Mckay and its members,” Chief Mel Grand jamb said in a release.

If a legal challenge is launched, it would mark a new type of challenge launched by an Indigenous community arguing their rights have been infringed by a project being rejected.

“I think when you look at the economics of any big project, you’re looking not necessarily at what ( the oil price) is today, because it’s not award- winning today in Western Canada,” said Kevin Birn, vice-president of North American crude oil markets at IHS Markit. “But you’re looking at the long term.”

Exactly where oil prices will settle in the coming decades is anyone’s guess, and depends not only on supply and demand trends but whether the rail and pipeline capacity issues will be resolved.

Last year, Birn wrote that the price of oil needed for an oilsands producer to break even has been falling. In 2018, an oilsands miner without an upgrader required a price of US$ 65 per barrel to break even, compared to US$ 100 per barrel in 2014. He also said that the lack of new oilsands mines in recent years means there isn’t a lot of data about how operating costs have changed. As a result, some of the improvements since 2014 could be transitory, or conversely, there could be unknown engineering costs that further improve oilsands mining.

Teck has not disclosed a break- even price for the

Frontier project. But in one recent presentation to investors Teck noted that the Fort Hills project — the last oilsands mine built, in which its owns a minority stake — would produce EBITDA, a rough measure of cash flow, “for decades” if oil prices remain between US$ 60 to US$70 per barrel.

“That wasn’t the official ( oil price) forecast,” said Doug Brown, director of public affairs at the Vancouver- based Teck. “It was just to show there’d be strong EBITDA upside potential at that price.”

Still, that’s higher than current prices, and could fall below many price forecasts, especially if the world transitions to low-carbon energy sources at a faster pace.

For example, the International Energy Agency suggested in its 2019 global outlook that prices per barrel could fall to US$ 59 per barrel by 2040 if sustainable development policies take hold. On the other hand, it predicted that if current policies remain in place, oil prices could reach US$ 134 per barrel by 2041.

Aside from prices, there are also questions about how Teck, which has a total market capitalization of $9.3 billion, will finance construction of Frontier, which has an estimated capital cost of more than $20 billion.

“I don’t believe they have enough equity to build this project out of their own pocket,” said Dinara Millington, vice-president of research at the Calgary- based the Canadian Energy Research Institute.

So far, the company has said only that it would likely seek a partnership to advance the project.

As far as Lindsay’s last concern about pipelines, there has been some progress in Canada. If all proposed pipelines are built, there likely would be enough capacity for Frontier to move some or all of its production, according to Millington.

“A concern I would have is around the project economics,” said Millington, adding no one really knows where oil prices will be in the future.

But that assumes the pipelines are constructed, and analysts including Birn have noted there is still a possibility of physical opposition, given that some First Nations and local communities are against fossil fuel development. Over the weekend, First Nations, upset with the RCMP’S decision to arrest activists at the Coastalgas Pipeline project in B.C., forced the cancellation of Via Rail service between Montreal and Toronto, while the Vancouver Port Authority is also in a standoff with Indigenous groups.