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Oil industry’s 2014 resolution: to focus on aboriginal issues

For the oil patch, 2014 has to be the year it finally gets its act together on aboriginal issues.

Industry leaders know they have to rethink their approach, and that the clock is ticking as they seek to get oil and gas through First Nations territories to export markets before opportunities vaporize.

It stands to be their toughest task yet.

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One problem is that the oil and pipeline companies are already behind in the trust-and-relationship-building departments after some misadventures that created bad blood, especially during the regulatory process for the Northern Gateway oil pipeline to the Pacific from Alberta.

For proof, take a peek at a recent survey by the University of Calgary's School of Public Policy, which found that one-third of aboriginal Canadians have no trust whatsoever in oil and gas companies.

Another problem is that these are bottom-line-focused corporations with limited ability to solve major social and legal issues that have simmered for decades, and which many native leaders want dealt with before anything gets built on their lands.

Northern Gateway won conditional clearance from a federal regulatory panel last week and Ottawa has until the middle of 2014 to make a final ruling. Already, some B.C. native groups have promised court battles if the project – aimed at getting crude to more lucrative foreign markets – gets a green light.

David Collyer, president of the Canadian Association of Petroleum Producers (CAPP), the sector's main lobby group, understands both the nuance and the need to move quickly. He also knows the limitations as companies clamour for higher international oil prices for their shareholders.

Mr. Collyer has studied closely the recent report by Doug Eyford, who was tasked by Prime Minister Stephen Harper to gather First Nations' views on resource development. He says it lays out some workable approaches for fostering inclusion in the economy among native people.

"A lot of it is founded on relationships and trust and that has to be built over a period of time. One can certainly take the view that that foundation is not where we'd like it to be at the moment," Mr. Collyer said in an interview.

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"But I think it really does come down to the right people – government and industry, and importantly First Nations – trying to see if there's a pragmatic way through this."

It's not easily said or done. One thing's for sure, public hearings for projects are not the forum to solve long-festering disputes, including some that could be a quagmire for resource developers. Aboriginal land rights and title in B.C., for instance, are the domain of government and native negotiators, and ultimately the courts.

In its report on Northern Gateway, the joint review panel steered clear of those issues, saying they were not part of its mandate of deciding whether the pipeline is in the public interest.

Hearings, Mr. Collyer says, are adversarial by definition – an arena for people to express opposing views on a specific project rather than a warm and fuzzy place where everyone reaches understanding and then walks home holding hands.

But there are examples where the energy industry and First Nations have worked together well, and that could be a starting point, he says. For one, look at the Haisla First Nation's support for, and potential economic gains from, planned liquefied natural gas plants in their territory around Kitimat, B.C., and the Douglas Channel to the Pacific.

The Fort McKay First Nation in Northern Alberta has also profited handsomely by forming businesses to support oil sands development around its lands, though even its leaders have drawn the line at how close projects should encroach on their boundaries.

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"We as industry can't solve the land claims issues, but we certainly have a role to play with respect to relationships with First Nations and we certainly have a role to play with respect to what sort of benefits flow from projects to First Nations," he said. "This is part of the equation but certainly not all of it."

Mr. Collyer said solving these issues is at the top of CAPP's priority list for next year. That makes sense given the fact that pipeline proposals worth more than $25-billion, to move oil both East and West, are at stake.

Still, anti-industry comments from members of some B.C. First Nations that followed the Northern Gateway report suggests the gulf between the two has never been wider. It is hard to see problems that have taken years to create be solved in months.

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About the Author
Mergers and Acquisitions Reporter

Jeffrey Jones is a veteran journalist specializing in mergers, acquisitions and private equity for The Globe and Mail’s Report on Business. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general topics. More


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