Tom Flanagan is professor emeritus of political science at the University of Calgary and a senior fellow at the Fraser Institute.
The Federal Court of Appeal recently overturned the federal government's approval of the Northern Gateway pipeline because of insufficient consultation with First Nations. This decision dramatizes the dilemma of Canada's oil and gas industry.
Opposition to pipelines and tanker traffic, particularly by First Nations, threatens to strand Canada's enormous hydrocarbon resources, cutting them off from international markets where they can be priced at their full value. From reading the news headlines, it sometimes seems that all First Nations are opposed to all oil and gas development.
The true situation, however, is much less one-sided. The Indian Resource Council has announced its concern over "pipeline gridlock" and will hold an October conference in Calgary to discuss possible solutions. The IRC is an organization of 174 First Nations interested in oil and gas development.
At the present time, when many wells are shut in due to low prices, only 29 of them are producing oil and 37 natural gas, but the other IRC members have produced in the past or may wish to produce in the future. Beyond the royalties from production, thousands of First Nations and Métis people are employed in the industry, especially, though not only, in the oil sands.
The IRC started as an advisory group to Indian Oil and Gas Canada, the Crown corporation that supervises exploration and production on reserves. Historically, IOGC's approach was paternalistic, leaving First Nations as passive recipients of royalties rather than active entrepreneurs. But the IRC is now working with IOGC to upgrade First Nations participation, to make them active investment partners.
First Nations received $163-million in royalties and fees from IOGC in the 2014-15 fiscal year, which is not trivial, but the returns can be potentially much greater if First Nations become partners in owning drilling and well-service companies, pipelines and refineries.
That helps to explain why the IRC is speaking out now. Most of their members are not located in trendy urban areas where they can make money by opening casinos and building condominiums. These are small and remote rural communities whose best opportunity for improving their standard of living is development of their natural resources. It would be ironic in the extreme if they were to be permanently frustrated by other First Nations and green activists.
Members of the IRC undoubtedly remember what happened to the Mackenzie Valley natural gas pipeline. After 30 years of environmental reviews and aboriginal title negotiations, most First Nations in the Mackenzie Valley were ready to support the pipeline. Like the 26 First Nations who are ready to take an equity share in Northern Gateway, they saw it as a way to improve their standard of living without endangering the natural integrity of their homeland.
But there was one holdout group; and, like the coastal First Nations who have challenged Northern Gateway, they went to the Federal Court of Canada, alleging inadequate consultation. This last delay proved fatal and the Mackenzie Valley pipeline was never built, because natural gas prices had fallen in the meantime.
Perry Bellegarde, the National Chief of the Assembly of First Nations, recently said that more than 130 First Nations are categorically opposed to petroleum development. Even if that statement is accurate (and he did not give any source for it), about 500 First Nations remain open-minded on the subject. Yet once again, some First Nations are blocking potential prosperity for others.
Recent court decisions and political trends have given First Nations something close to a veto over major pipeline projects. The IRC's challenge will be to reach out to the open-minded First Nations, to persuade them that responsible development of oil and gas can be profitable while respecting environmental values. Maybe they can have greater success where corporations and governments are failing.