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Dover oil sands deal with Fort McKay band raises the bar for future projects

In an agreement worked out after almost two years of negotiations, Alberta’s Fort McKay band didn’t get the buffer zone it was seeking to protect an area of great aboriginal significance.

What it got is a commitment it believes will achieve the same outcome — plus a broader lesson for the oil sands industry: Invest the time to work with First Nations on energy projects.

“If they come with the position that this is what we want, it’s going to be our way, and we are going to get all the approvals we need … I think that is the wrong approach,” Alvaro Pinto, chief negotiator for the Alberta community, said in an interview.

“The more proactive you are in working with First Nations, the more creative you are in finding solutions together. That is what is necessary.”

The Fort McKay community, Brion Energy Corp., and Athabasca Oil Corp. reached an agreement late Friday to develop the Dover oil sands project after a meeting in the community near Fort McMurray between Fort McKay chief Jim Boucher; Zhiming Li, president and CEO of Brion, majority owned by PetroChina; and Sveinung Svarte, CEO of Athabasca.

The confidential deal has three components: environmental protection, fiscal terms and business opportunities.

Mr. Pinto said it was the environmental component that caused the most disagreement and that led the band to challenge the project before regulators and in the courts.

The agreement involves implementing best-management practices to protect the Moose Lake reserve, which the community regards as integral to its health and cultural survival. The First Nation originally wanted a 20-kilometre buffer zone around the project.

“We didn’t get a no-development zone, as we thought initially, but there are … many other measures that we can take, and the industry can take, to minimize the impact,” he said. “It gives us very good comfort that we are getting the environmental protection that we are looking for here.”

Mr. Pinto said the agreement raises the bar in terms of what’s expected from oil sands companies operating around the Fort McKay community near Fort McMurray, especially Moose Lake.

Andre De Leebeeck, vice-president of investor relations at Athabasca, said the deal paves the way for the approval of the Dover project by Alberta’s provincial cabinet and by Alberta’s environment department.

The native endorsement of an oil sands project is a huge step on greening the oil sands internationally

As new oil sands operators, Athabasca and Brion didn’t fully appreciate the importance of getting their leadership involved in the discussions, he said.

Kristi Baron, spokesperson for Brion, said it was important for her company to start on the right foot and to take the time to find the right balance.

“Brion Energy is a pretty new company. We have yet to even to produce oil. We knew going in that this was a young relationship that needed to be built and grow with Fort McKay and that takes time.”

Bill Gallagher, a lawyer, author and expert on aboriginal issues, said the biggest winner from the agreement is Alberta Premier Alison Redford, who no longer has to pick sides.

“This is a social licence win for both parties, that takes the heat off the Alberta government,” he said. “The native endorsement of an oil sands project is a huge step on greening the oil sands internationally.”

Still, it would have been an even bigger step forward if the terms were made public and everyone knew what it takes to get First Nations support.

It is customary for such benefits agreements to remain confidential. Once they are locked up, industry sees them as providing an advantage in accessing resources. First Nations regard them as their own business.

Transparency would make everyone more accountable, help with the development of industry best-practices, perhaps stop the escalation of expectations, and temper risk over oil sands development.

Unfortunately, we hear too much about why First Nations are opposed to development, and not enough about what it takes to make it acceptable.

BILL GALLAGHER  |  LL.B. Strategist

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