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Phil Fontaine, former national chief of the Assembly of First NationsChris Young/The Globe and Mail

On its 4,000-kilometre path across the country, TransCanada Corp.'s Energy East's pipeline would traverse the traditional territory of 180 different aboriginal communities, each of whom must be consulted and have their concerns accommodated as part of the company's effort at winning project approval.

The Energy East plan is to bring 1.1 million barrels per day of western crude to eastern Canadian refineries and export terminals; it has been touted by politicians and its proponents as a nation-building exercise, and by industry as providing access to new markets for landlocked crude.

But native leaders want to ensure that they see some benefits from the $12-billion project and they could present a challenging obstacle to its completion if they feel excluded. On Tuesday, First Nations leaders gathering in Gatineau, Que., will launch an effort to devise their own national energy strategy.

Calgary-based TransCanada has hired Phil Fontaine – former national chief of the Assembly of First Nations – to help it win the support of native communities from Alberta to New Brunswick.

TransCanada is just the latest company to grapple with the challenge of how to work with aboriginal Canadians to develop pipelines, oil and gas projects, mines and electricity generation, while maintaining the commercial focus on speedy execution and cost control.

The country is at a critical juncture in relations between government, industry and aboriginal communities.

The federal government estimates there is $650-billion worth of resource projects to be developed in the next decade, and virtually all of them are in areas claimed by various aboriginal groups as part of their traditional lands.

Native leaders are demanding to be treated as not just another stakeholder group but as full partners who have treaty rights that must be respected and historical grievances that must be addressed. But they often don't have the capacity to be properly engaged in the process, sometimes lacking business acumen, an educated work force or financial resources needed to prosper in a modern economy.

And industry is now being asked to fill gaps left by government – an uncomfortable position for many companies that simply want to win quick approval for a project.

Resource companies have seen what happens when things go badly. Enbridge Inc. faces a wall of aboriginal opposition to its proposed Northern Gateway pipeline in British Columbia; First Nations have blocked logging roads in Quebec and mining roads in Ontario and activists have disrupted Southwestern Energy Co.'s shale-gas exploration in opposition to fracking on their traditional territory in New Brunswick.

"We are not anti-business," Mr. Fontaine said at recent conference in Toronto, organized by the University of Waterloo's School of Environment, Enterprise and Development. "But development will not occur unless aboriginal people have been engaged, consulted in a proper way, and there is an accommodation of aboriginal interests."

Working with Mr. Fontaine, TransCanada has begun that process with the 180 aboriginal communities along its Energy East path. He acknowledged that pipeline companies face a special problem because the projects are linear and involve far more communities than a mine or oil sands project would touch.

"The important challenge we have now is to inform communities about the Energy East project," he said. "You can be certain there won't be a single conversation or discussion that takes places that doesn't make some reference to benefits."

TransCanada spokesman Philippe Cannon said it is too early to say what the benefits package would look like, and whether it would include an equity stake, as Enbridge has offered with its Northern Gateway project.

Former prime minister Paul Martin has taken up the cause of aboriginal education, arguing improved schooling is a fundamental prerequisite to First Nations' participation in the resource economy, and that business must be involved in addressing the appalling educational deficit that exists on reserves.

For resources industries that complain of skills shortages, the young aboriginal population – the fastest growing demographic in the country – represents a key pool of labour that can only be fully utilized if education is dramatically improved, Mr. Martin told the Toronto conference.

"Under-funding of grade school and high school is the single most important dagger drawn at the heart of aboriginal communities across this country," he said.

Mr. Martin urged resource companies to lobby the federal government to address chronic under-funding of on-reserve education.

Oil and gas companies are increasingly recognizing that they have to do more than simply negotiate a traditional benefits package with aboriginal communities impacted by their projects, said David Collyer, president of the Canadian Association of Petroleum Producers.

"It is an area we are involved in now," Mr. Collyer said. "But we probably can do more and should do more in terms of training and development of aboriginal people. But it is not industry's sole responsibility – governments have to play a role as well."

Denise Restoule is chief at the Dokis First Nation on the French River in Northern Ontario, where the band is partnering with power company Hydroméga to develop a 10-megawatt run-of-river electricity project, backed by a 40-year purchase agreement with the Ontario Power Authority.

It took many years – and several different band councils – to conclude an agreement on the deal, as the Dokis people lacked a basic understanding of project development and financing. Once completed, the hydro contract will provide a steady stream of income to the 1,200-person band, which will be set aside in a trust fund to finance education and business development. It has a 40 per cent equity stake in the Okikendawt Hydroelectric Project.

Ms. Restoule said the developers had to be patient and work to understand the culture and political realities of the reserve to succeed.

"The developer needs to develop a relationship with the First Nation, and not just send some documents and say you've been consulted.," she said in an interview. "They need to understand their values and what is important to them. And once they understand where the community is at, then real discussions can start to work on developing a real partnership."

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