Pipeline may be historic turning point for Indigenous
It’s likely that sometime this year, control of the $13-billion Trans Mountain pipeline, one of the biggest megaprojects in Canadian history, will be transferred to First Nations investors.
That transaction would be a historic turning point in relations between the First Nations and non-Indigenous peoples of Canada.
It would create one of the largest Indigenous-owned assets in the world.
An expanded heavy-oil Trans Mountain pipeline from Edmonton to Burnaby, B.C., whose 1,150-km route traverses First Nations territory, is a logical candidate for Indigenous ownership.
In contrast with disputed treaties and land claims, an Indigenous-controlled Trans Mountain would represent indisputable ownership of a major business asset of critical importance to Canada, and to an Alberta economy in need of tidewater access for its landlocked oil resource.
Three Indigenous investor groups have prepared credible offers to buy control of the Trans Mountain from Ottawa.
Project Reconciliation, a coalition of First Nations and Métis communities in Western Canada, proposes to buy 51 per cent majority control of the Trans Mountain for $6.9 billion, to be financed with an issue of bonds backed by shipping contracts from oil producers.
Iron Coalition is a consortium of Alberta First Nations that hopes to recruit B.C. First Nations to join in its bid for Trans Mountain, backed by pension funds and other institutional investors.
And Western Indigenous Pipeline Group (WIPG) is B.C.-based, as most of the pipeline is. Michael LeBourdais, chief of the Whispering Pines/Clinton Indian Band near Kamloops, has been pushing for an equity stake in the Trans Mountain pipeline since 2012, when it was still in the proposal stage.
The motivation of each group is genuine economic sovereignty — income from a business asset in place of Indigenous reliance on government support — and the chance to demonstrate world-class environmental stewardship under Indigenous management.
The bids were inevitable. The likely prospect of a First Nations-owned Trans Mountain is only the most visible
sign of the quiet revolution underway in Indigenous entrepreneurship.
Indigenous business activity already contributes more than $30 billion to Canadian GDP. And First Nations leaders have set a goal of more than tripling that number by mid-decade.
A $100-billion Indigenous economy in Canada by 2024 might be an ambitious proposition, but hardly unrealistic.
Canada’s more than 50,000 Indigenous businesses are engaged in every sector of the economy, including resource extraction, construction, retailing, tourism, aquaculture and transportation.
Those businesses are growing nine times faster than the Canadian average, according to the Canadian Council for Aboriginal Business.
And roughly one-quarter of Indigenous businesses are exporters, about twice the national average for small and medium-sized businesses. That number would be higher if Indigenous communities had better broadband access, since most Indigenous exporters rely on e-commerce to reach world markets.
Indigenous communities are divided on resource-development projects, of course.
The Wet’suwet’en Nation’s current civil-disobedience efforts to block construction of the Coastal GasLink pipeline in northwestern B.C. has made headlines across the country.
But in 2016-17, the latest period for which figures are available, 35 First Nations were pumping oil on their territories, and 51 operated naturalgas production facilities on their land.
In recent years, First Nations have raised their sights in taking ownership of big-ticket resource assets.
The Haisla Nation in B.C. has a large stake in the planned Pacific terminal for the $40billion LNG Canada megaproject.
In 2017, the Fort McKay First Nation and Mikisew Cree First Nation paid $503 million to buy a 49 per cent stake in Suncor Energy Inc.’s East Tank Farm oil-storage project in the Athabasca oilsands region.
Last year, the Indigenousowned Steel River Group of Calgary won a bid to build a 65-km stretch of the 120-km Pioneer Gas pipeline co-owned by venerable Alberta utility TransAlta and Tidewater Midstream.
As to the 670-km Coastal GasLink pipeline, all 20 elected band councils along its route have signed benefit agreements with pipeline operator TC Energy Inc. (formerly TransCanada Corp.).
And the Haisla Nation is in talks to buy an equity stake in the pipeline.
“Our governance system has been managing poverty,” Crystal Smith, chief counsellor of the Kitimat, B.C-based Haisla Nation, said last month.
“The opportunities that are available for today’s generation and future generations of First Nations people that participate in these projects are life changing. They’re Nation changing.”
An Indigenous role at the commanding heights of the economy is not a straightforward matter.
That much is evident from the vociferous objections to the Coastal GasLink pipeline by hereditary clan chiefs in the affected region, who are at loggerheads with pro-pipeline elected chiefs on the pipeline route.
Indigenous ownership also carries risks.
The risks are most obvious with the Trans Mountain, given its enormous size. What if oil prices fail to sustain the viability of the pipeline in coming decades?
And what if the many First Nations and non-Indigenous environmentalists opposed to Ottawa’s near-tripling of Trans Mountain’s capacity succeed in preventing completion of the expanded pipeline by a planned mid-2022?
Then again, as early as 2016, Canadian banks and pension funds began approaching First Nations with offers of financing Indigenous investment in resource assets, notably the Trans Mountain pipeline.
And more recently, CEOs of Alberta oilpatch firms have expressed support for Indigenous ownership of energy assets — following the example of oilsands giant Suncor — in hopes that the new ownership model would expedite completion of controversial projects.
Ottawa has signalled its preference for an Indigenous buyer of Trans Mountain. But Finance Minister Bill Morneau, who will make the decision on selling the Crown asset, is known to prefer a combined bid by the Indigenous groups rather than alienating any of them.
That’s a sensible resolution. Having lined up a tremendous amount of financing, the three Indigenous bidders would free up a lot of that financing for other energy and infrastructure acquisitions if they made a joint bid for Trans Mountain.
Project Reconciliation’s bid resembles that model. It would direct 20 per cent of Trans Mountain’s estimated $180 million in annual cash flow to its First Nations investors, and commit the rest to a sovereign wealth fund (SWF). The fund would invest in clean-energy businesses.
SWFs are springing up in many Indigenous communities, with First Nations-owned commercial enterprises setting aside funds to invest in Indigenous business startups, as well as new housing, clinics and recreation facilities.
Sharleen Gale, chief of the Fort Nelson First Nation, anticipates an era when confrontation gives way to mutually beneficial business partnerships.
“We don’t want to be in the courts,” Gale said last month. “We want to take equity stakes and participate in the economy of our territories.”
The current renaissance in Indigenous business resembles Quebec’s “Quiet Revolution” of the 1960s, in which Québec francophones gained ownership of the Québécois economy.
A centrepiece of that revolution was the nationalization of Québec’s power utilities, and their consolidation into Hydro-Québec. That giant utility nurtured generations of exceptional Québécois business managers and entrepreneurs, much as Intel Corp. and Hewlett-Packard Co. created Silicon Valley.
It is not unreasonable to expect that an Indigenousowned Trans Mountain pipeline could have a similar impact.