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Alberta First Nation to tap bond market for energy investment

Alberta’s Fort McKay First Nation will be going to the bond market later this year, looking to raise the $350-million it needs to buy a 34-per-cent stake in Suncor Energy Inc.’s East Tank Farm, a key processing facility for the company’s Fort Hills oil sands mine.

Jeff McIntosh/THE CANADIAN PRESS

Alberta's Fort McKay First Nation will be going to the bond market later this year, looking to raise the $350-million it needs to buy a 34-per-cent stake in Suncor Energy Inc.'s East Tank Farm, a key processing facility for the company's Fort Hills oil sands mine.

The tank farm investment – which should yield utility-like rates of return – is just one of several ventures Fort McKay First Nation (FMFN) is pursuing as it partners with energy companies to expand its business interests.

It is also considering purchasing from Chinese-owned Sunshine Oilsands Ltd. a tolled access road that runs through its traditional territory, and is exploring geothermal potential on its land with another Chinese firm.

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While Indigenous opposition to oil-sands projects and pipelines makes headlines, FMFN's Chief Jim Boucher brought a different message to the Assembly of First Nations annual energy forum in Ottawa this week.

"We want to demonstrate that there is a benefit to the people and the communities" from partnering with energy companies, he said in an interview Thursday. "We have a lot of communities that have employment issues and social issues, and a good economy helps us solve a lot of these problems we have on reserve."

He noted his community of roughly 600 people has a higher average household income than the province as a whole.

The Assembly of First Nations energy forum showcased the organization's effort to build capacity among communities not only to partner with companies but to undertake their own projects, particularly in the power sector where Ottawa is underwriting efforts to reduce reliance on expensive and polluting diesel.

However, the debate over Indigenous involvement with the oil-sands industry continues to rage.

Grand Chief Serge Simon of the Mohawk Council of Kanesatake is a leading member of the Treaty Alliance Against Tar Sands Expansion, an alliance of 122 First Nations and U.S. tribes that have pledged to work together to block the four oil-sands pipeline projects that have either been approved or are proposed, in an effort to stop further oil-sands development. Chief Simon also attended the AFN energy forum.

The alliance members do not "believe that there is any long-term prosperity to be had in connection with the Alberta oil sands – further expansion of the oil sands will only lead to the ruin of both the environment and the economy," he said. However, he said they also support Alberta First Nations that seek to share the benefits of current production and want a greater role in environmental protection.

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Mark Little, Suncor's president for upstream operations, said his company is proud of its effort to provide industrial benefits with Fort McKay and other First Nations in Alberta and across the country where it does business.

But he said the relationships need to evolve to ensure the business deals yield ongoing revenues to support the communities.

"If the objective is to allow the community to thrive and have education and infrastructure and sewer and water and all these types of things, how can we work together to create a mechanism that would provide long-term stable cash flows," Mr. Little said in an interview after appearing on a panel with Chief Boucher.

FMFN has generated enormous revenue from industrial benefits and energy-related businesses. In 2015, it had revenue of $816-million, which dropped to $416-million last year as a result of the crude price drop .

The tank farm should be recession-proof, the chief said. The Mikisew Cree First Nation (MCFN), which is based in Fort Chipewyan, is purchasing 14.7 per cent of the $1-bilion project. The agreements were due to close this spring but are being pushed back to give FMFN and MCFN time to arrange financing.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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