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Energy and Resources First Nations-led group planning bid for majority stake in Trans Mountain pipeline

Delbert Wapass, executive chairman of the Project Reconciliation group and former chief of Thunderchild First Nation, has formed a company called Project Reconciliation to buy a 51 per cent stake in Trans Mountain Pipeline on behalf of First Nations.

Kayle Neis/The Globe and Mail

A First Nations-led group is putting together a bid to buy a 51-per-cent stake in Ottawa’s Trans Mountain oil pipeline with the aim of kickstarting the long-delayed expansion by giving Indigenous communities a financial stake.

All First Nations in Saskatchewan, Alberta and British Columbia are being invited to participate in the $6.8-billion plan, which values the project at more than $13-billion. The effort is led by Delbert Wapass, former chief of the Thunderchild First Nation in Saskatchewan and current vice-chairman of the Indian Resource Council. The group, called Project Reconciliation, hopes to build support for the massive oil export project, which has divided Indigenous people.

The group is in talks with major Canadian banks to lead a syndicated debt issue to finance the acquisition and its share of the expansion costs. The senior secured debt would be underpinned by the long-term shipping contracts that energy companies have signed with Trans Mountain, as well as guarantees that governments have offered to cover construction risks, the group says. That would eliminate any need for taxpayer subsidies or upfront payments by the Indigenous communities.

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The participating First Nations would own shares in a general partnership, with those along the pipeline right-of-way owning a more senior class of share as they are most affected, the group says.

“We know that the government bought [Trans Mountain] with the understanding that they’re going to sell it – they’re going to let it go for fair market value," Mr. Wapass said in an interview. “We understand that. We’re not looking for a handout. We are going to be just as competitive as anybody else, and not using taxpayers’ money.”

He described the proposal as “very advanced," although Ottawa has told the group any deal will likely have to wait until the path to construction is clearer. A spokesman for Finance Minister Bill Morneau referred questions about the proposal to a statement the minister made on Monday, saying the government welcomes interest from Indigenous groups, but is not ready to engage in formal talks.

Mr. Morneau said any ownership agreement should ensure the project is built and operated on a commercial basis; provides opportunities to participate for communities that would be affected; and contributes to economic development in Indigenous communities “in keeping with the spirit of reconciliation.”

Project Reconciliation, first outlined at an Indigenous Energy Summit at the Tsuut’ina Nation near Calgary in January, has assembled a group of Indigenous and non-Indigenous executives with experience in oil and gas, capital markets, business development and Indigenous relations, Mr. Wapas said.

The group hopes to gain enough support among First Nations to help get approvals to start construction, and later provide income and economic development to communities that have dealt with poverty for decades. Early responses from the government of Alberta Premier Rachel Notley and her rival in the provincial election campaign, Jason Kenney’s United Conservative Party, have been positive, said Harrie Vredenburg, a professor and Suncor Energy chair of strategy and sustainability at University of Calgary’s Haskayne School of Business, and an executive board member of the group.

The funding model takes its cue from a 2017 deal in which Alberta’s Mikisew Cree and the Fort McKay First Nation bought 49 per cent of a Suncor Energy Inc. oil sands storage tank farm for $503-million. That deal was financed through a high-yield bond issued to more than a dozen investors and was backed by a 25-year service agreement with Suncor.

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The expansion would nearly triple capacity of the existing pipeline to 890,000 barrels a day. Ottawa paid Kinder Morgan Canada $4.5-billion for Trans Mountain last year in a bid to get the project completed. The industry and the Alberta government have been adamant that opening up exports to Asia would help stem the economic malaise and job losses that have plagued the province. A major stumbling block has been opposition among First Nations, especially coastal communities.

The federal cabinet is expected to rule before the end of May on whether to approve the expansion, after the National Energy Board recommended it proceed. It was the second approval since the Federal Court of Appeal quashed the NEB’s initial green light last summer.

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Among other Project Reconciliation executives are managing director Stephen Mason, who has led startups of several energy companies, former Tk’emlups te Secwepemc First Nation chief Shane Gottfriedson, and former Onion Lake Cree Nation chief Wallace Fox, regional directors of B.C. and Alberta, respectively.

Some First Nations remain in staunch opposition, fearing environmental degradation and negative effects on their communities. Winning their support is a long shot at best.

“It’s not a question of who owns the pipeline, or who has what shares in the pipeline," said Grand Chief Stewart Phillip of the Union of British Columbia Indian Chiefs. “The project is detrimental to the marine ecosystem. It’s a threat to the killer whales, the wild salmon - it goes on and on. I think they are pretty aware of my position.”

Mr. Wapass acknowledged that he won’t win over all Indigenous communities, despite promises of state-of-the art environmental protection and marine safety.

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“By inviting people to be part of this journey, this opportunity, people will then realize that environment and economy don’t have to be in opposition. So I’m optimistic. I’m not one of those who shy away from that type of opposition, because it’s going to be there,” he said.

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