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Without cleanup assurances, Indigenous groups vow to block sale of Norman Wells oil field

Indigenous groups have pledged to block any sale of the Norman Wells oil field in Canada’s Far North without assurances that a buyer will pay for the massive cost of cleaning up the aging assets.

The opposition throws doubt on plans by Imperial Oil Ltd. and the federal government to offload the operations, which started up in the 1920s. Calgary-based Imperial owns two-thirds of the assets; Ottawa is relying on the company to sell its one-third interest.

The company has been shopping the assets for nearly two years, but the process has been bogged down by a growing dispute over aboriginal consultation and environmental liabilities, documents obtained by The Globe and Mail show.

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The threat of legal action is detailed in previously unreported correspondence between the Sahtu Secretariat Inc. (SSI), which represents regional Dené and Métis land corporations in the Northwest Territories; and Imperial; Minister of Crown-Indigenous Relations Carolyn Bennett; and federal Finance Minister Bill Morneau.

Hanging in the balance is the fate of one of Canada’s oldest oil fields and responsibility for hundreds of millions of dollars in associated cleanup obligations.

Northern Dené and Métis communities say they are not opposed to a sale of Norman Wells – they initially explored bidding on the assets – but complain that they have been largely shut out of the process, contrary to terms of a 1994 land-claim agreement with Ottawa.

They also want assurances that whoever buys the aging oil field has a well-defined plan and the financial wherewithal to eventually clean it up, according to the documents.

Those concerns reflect pointed fears of a repeat of Yellowknife’s Giant Mine and the Faro mine in the Yukon, both of which waited years and required major public pressure for remediation work to get under way.

“This aspect is of prime importance to SSI given that the current owners are seeking indemnification against future liabilities following a sale,” SSI chairperson Ethel Blondin-Andrew wrote in a letter dated Dec., 11, 2017.

The letter warned that the Sahtu would “consider its options, including legal action seeking injunctive relief,” should Imperial or the federal government proceed with any sale or transfer of the assets without adequate consultation.

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Ms. Blondin-Andrew stepped down from her position last month and could not be reached for comment. Her successor, interim chair Charles McNeely, did not return phone and e-mail messages on Monday.

Imperial, majority owned by U.S. giant Exxon Mobil Corp., put the 11,000-barrel-a-day Norman Wells operations up for sale in September, 2016, as part of efforts to sell off legacy assets.

The sub-Arctic field was discovered in 1920 and is fast approaching the end of its economic life. Production has been suspended since January, 2017, while Enbridge Inc. works to repair a damaged 2.5-kilometre segment of pipeline under the Mackenzie River.

Last October, Imperial said it was studying “multiple proposals,” but no formal offer has been made public. Spokeswoman Lisa Schmidt said Monday the marketing process continues, but declined further comment.

A sale of the producing assets, including a related fuel terminal, would relieve Imperial of cleanup obligations the company has estimated around $187-million.

However, Indigenous groups and industry experts peg reclamation costs much higher, at up to $1-billion, based on a recent contract Ottawa awarded to clean up Yellowknife’s Giant Mine.

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In the documents, Ms. Blondin-Andrew said the lack of consultation on these and other concerns “makes a mockery of our land claim,” and calls into question Canada’s commitment to reconciliation.

Ms. Bennett’s office did not respond to a request for comment Monday. The minister had argued in correspondence that Ottawa has funded the Sahtu’s participation in exploring a bid for the assets while reiterating a commitment that any transaction “fully addresses the environmental liabilities of the Norman Wells operation.”

But the Sahtu say it is unclear whether Canada has set aside any funds to that end, and that delays cleaning up the Giant Mine and the Yukon’s Faro mine inspire little faith in such commitments.

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