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Opinion: First Nations should focus on industry – Vancouver Sun


Pacific Future Energy plans to build world’s greenest refinery in B.C.
By Ovide Mercredi, Special to the Vancouver Sun, Photograph by: Ian Smith, PNG

Canada will be celebrating 150 years since Confederation in just two years.

What will First Nations celebrate?

When I think about that, I think about my nation, the Misipawistik Nation, which sits near the point where the Saskatchewan River meets Lake Winnipeg. The name means Rushing Rapids in Cree, but the Grand Rapids hydro dam completed in 1968 silenced those rapids, forever.

When this dam was created, four thousand workers and their families descended to work on the dam construction. Immediately, brand new homes, a school and a modern hospital were built for the hydro workers.

Our neighbour Cree community of Chemahawin was flooded. An entire Metis/First Nations community had to be relocated to a new village. My family was forced off lands we had occupied for more than a century. My parents did not even have the time to salvage the logs of our family home.

The inequality between First Nations and the new Hydro community was stark.

After years of profound social upheaval, it took until 1991 — 23 years later — to offer about $5 million to the community, even though the dam created more than a billion dollars in economic activity. This was followed with a settlement with the fishermen on April, 2001, for $7 million, 32 years later.

These settlements were meagre and unfair.

The mentality at the time treated local people, mostly First Nations and Metis, as obstacles whose support should be purchased with the minimum amount possible.

The hunting and fishing economy was treated as a residue from the past with no significant social or economic value.

More recently — in 2011 — I negotiated an additional agreement valued at just over $100 million to be paid to my community over a 50-year period. This was 42 years after the dam was built.

Only three years ago, the Metis and Town of Grand Rapids finally had a water and sewer service plant constructed, a benefit of developement that Hydro employees had enjoyed from the early construction of the dam. My mother, at age 90, could finally have clean drinking water.

Clearly there must be a better way.

There was extreme resistance — like we still see from many today — to the fact First Nations require respect and recognition as nations, as another order of government.

We know today that when industry wants to build things on First Nations territory, it requires more than just consultation and accommodation; it requires free, prior, and informed consent.

Respect and recognition — based on rights and title and treaty rights — are very important as a foundation for the economic opportunities required to lift First Nations communities out of poverty.

One of the biggest issues on Canada’s agenda is the issue of energy. First Nations should be driving the vision and participate in all aspects of any energy projects, or we should reject them. First Nations care about our environment and also seek mutual economic gain. It’s time to truly share the wealth, in a sustainable way.

Many First Nations leaders who share the concerns I have highlighted here continue to feel that the only way to press for our rights is through protest, treaty negotiations and court challenges. While all of those avenues have their time and place, I believe the time has come to go past government and work with industry directly.

Governments have a role to play in the reconciliation process but if our focus is on economic reconciliation — ensuring that, when we invite business into our traditional territories, the value of our lands, our traditions, our people are appropriately recognized and that our communities are beneficiaries, unlike in my experience in Manitoba — then industry is where we need to focus.

I am putting these principles into action by serving as an adviser to Pacific Future Energy, a new company with bold plans to build the world’s greenest refinery in British Columbia.

PFEC has made a commitment to build this refinery in true partnership with First Nations, as an order of government. The company knows it must collaborate on developing plans, and gain informed consent before — not after — finalizing engineering and spending hundreds of millions of dollars on schemes that local First Nations can’t support. This is in keeping with the principles of the recent Tsilhqot’in decision that for the first time formally recognized title rights on lands without treaty in British Columbia.

This project will hopefully be a model for all resource projects in the future.

We must always leave the smallest impact on the environment we can. We don’t expect the fossil-fuel industry to be gone overnight — First Nations drive cars and trucks as anyone else, and use fossil fuels for many things — but we can certainly be the catalyst for benefiting from these resources from the land in the most environmentally sustainable way.

This means near zero carbon emissions from the refinery itself, thus honouring the airshed around the refinery and showing the world that we can meet the highest standards.

This means protecting the coast from a bitumen spill, something that would be devastating for everyone’s way of life on Canada’s west coast. Diesel, jet fuel and gasoline can evaporate after a spill. Bitumen could kill the fragile ecosystem for generations.

A refinery also means we can supply northern coastal First Nations communities with cleaner diesel from a nearby refinery rather than barging it all the way up from Vancouver. These are the kinds of things we need to explore as we define the partnership.

But, most important, it means sharing the wealth.

There is no question that respecting inherent rights and achieving a true genuine partnership will lead to a brighter, healthier and more prosperous future for all of Canada for generations to come.

I hope First Nations leaders who agree will join with me in this new dimension of our fight for inclusion and equality.

Ovide Mercredi sits on Pacific Future Energy’s advisory board, and is a former National Chief of the Assembly of First Nations, a constitutional lawyer and an advocate for First Nations’ rights for more than 40 years.

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Jacques Benoit Joins Pacific Future Energy as Senior Vice President-Engineering

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VANCOUVER, BRITISH COLUMBIA–(Marketwired – Jan. 20, 2015) – Pacific Future Energy Corporation (PFEC) is pleased to announce that Jacques Benoit, a 30-year engineering veteran in the oil and gas industry, has joined its management team as Senior Vice President – Engineering.

Mr. Benoit will be responsible for providing the management team with the day-to-day advice necessary to move the project forward, and will be immediately focused on preparing for the environmental assessment process. He will also be responsible for coordinating PFEC’s contracts and relationships with outside engineering contractors.

“We are very pleased that Mr. Benoit has joined our team,” said Samer Salameh, Executive Chairman. “He will bring important insights to us as we prepare our plans for the world’s greenest refinery, building our future and protecting our coast.”

Mr. Benoit brings tremendous experience to the role, most recently serving as Senior Vice President for the Environmental and Water division of SNC-Lavalin, with over 1300 employees and revenue in excess of $200 million. He is also the author of many industry publications.

About Pacific Future Energy

Vancouver-based Pacific Future Energy is a company that has been developed to finance, design and construct the world’s greenest oil refinery in British Columbia, Canada. The management team consists of leaders from the venture capital, corporate and government sectors, who share the belief that while it’s in Canada’s national strategic interest to diversify its markets for oil, it should be done in a socially and environmentally responsible manner while ensuring the protection of Canada’s west coast.

Stockwell Day pitches ‘Canada’s greenest refinery – BUSINESS IN VANCOUVER

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Pacific Future Energy refinery proposed for Prince Rupert would be half the cost of David Black’s $22 billion Kitimat Clean

“Canada’s greenest refinery” would cost $10 billion to build but would generate $1 billion a year in profits, says former Conservative cabinet minister Stockwell Day, chairman of the advisory committee for Pacific Future Energy.

That’s half of what David Black’s Kitimat Clean oil refinery would cost to build, according to the findings of a Hatch Ltd. engineering and feasibility study released by Black last week.

The two refinery proposals have a lot in common.

Their main selling points are that they would avoid the environmental damage that a bitumen spill would cause on B.C.’s coast because refined fuels such as diesel and gasoline evaporate.

Both project proponents believe that will go a long way to securing the kind of social licence with First Nations and the general public that pipelines alone have had a hard time getting in B.C.

To help sell the project to First Nations in B.C., Pacific Future Energy has recruited two high-profile former First Nations political leaders as directors – Shawn Atleo and Ovide Mercredi, both of whom are former Assembly of First Nations chiefs.

Unlike the pipelines proposed by Enbridge Inc. (TSX:ENB) and Kinder Morgan Inc. (NYSE:KMI), which are intended to feed refineries overseas, both B.C. refinery proposals would provide more jobs for British Columbians – about 3,000 direct permanent jobs in Kitimat Clean’s case, its backers say.

At a presentation to the Vancouver Board of Trade last week, Day said the refinery proposed for Prince Rupert would use cutting-edge technology to reduce carbon emissions.

“We’re talking about near-zero emissions,” Day said.

The refinery would cost $10 billion and would need a new pipeline, which would add another $6 billion to $8 billion to the project’s cost.

That’s close to the $13 billion that Black’s refinery was originally projected to cost when first proposed in 2012.

But last week, Black said the Hatch study raises that estimate to $22 billion. The project would also require another $11 billion to build a new pipeline and tanker fleet.

The Kitimat Clean refinery would be more expensive than a conventional refinery because the technology it would use would reduce by half the amount of greenhouse gases produced in a traditional refinery.

Asked how Pacific Future Energy could build a near-zero-emission refinery for half the cost of Kitimat Clean, Day said the production capacity would be 250,000 barrels per day – slightly more than half of Kitimat Clean’s daily production of 460,000 barrels.

“The engineering groups worldwide that have done projects like this … have drilled down into the numbers,” Day said. “They say that our economic model stands up.”

Day said declining oil prices would work to the project’s advantage.

“For us it means that the raw product that we’re going to be getting per barrel is going to cost less,” Day said.

Day said that based on an estimated 250,000 barrels per day of refined petroleum at $25 per barrel, the refinery’s projected profits are $1 billion a year EBITDA (earnings before interest, taxes, depreciation and amortization).

By Nelson Bennett

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Pacific Future Energy recruits former First Nations chiefs to help launch project

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Pacific Future Energy, undaunted by industry skepticism over its plans to build a B.C. bitumen refinery, has recruited two former national chiefs of the Assembly of First Nations to help launch the venture.

Shawn Atleo has been named to the company’s management roster as senior adviser of partnerships for the project. The proposal envisions taking bitumen from Alberta’s oil sands and converting it into refined products for export to Asia. And Pacific Future Energy appointed Ovide Mercredi to its advisory board.

First Nations have been vocal critics of shipping bitumen from the West Coast, but that doesn’t mean that they are against economic development, said Stockwell Day, the former federal international trade minister who joined Pacific Future Energy in August as special adviser.

Mr. Day said there is room in the oil market for Pacific Future Energy’s proposed $10-billion bitumen refinery. “This is being seen as doable and it’s making sense to people,” Mr. Day said Wednesday after delivering a speech to the Vancouver Board of Trade. “We’re now heavily engaged in a second round of funding.”

The site of the refinery has yet to be selected, though Prince Rupert is on the shortlist.

Oil experts say there appears to be a compelling argument about how Pacific Future Energy could obtain a social licence to operate, but the economic justification falls short because Asian refineries have cheaper labour and lower capital costs.

Company officials, however, point out that U.S. Midwest refineries are already processing Alberta bitumen and reaping significant profits by turning the Canadian raw material into petroleum products for sale in the United States.

No major new refinery has opened in Canada since 1984 because the business has thin profit margins and high capital costs, industry analysts say. Over the years, existing large oil refineries have focused on streamlining their operations to become more efficient, while smaller refineries have closed their doors.

Mr. Mercredi said there needs to be a new approach on the energy file to recognize aboriginal rights and title.

Mr. Atleo added that Pacific Future Energy has a long-term vision for a sustainable industry in northwestern British Columbia. Looking at Mr. Day and also referring to himself, Mr. Atleo joked: “Pacific Future is an important recovery program for recovering politicians.”

The project’s officials are drafting plans amid widespread opposition from First Nations in British Columbia to Enbridge Inc.’s Northern Gateway pipeline proposal, which aims to transport diluted bitumen from the oil sands to Kitimat. Much of the opposition has focused on fears of spills from oil tankers off the West Coast.

Pacific Future Energy is one of two major refining proposals seeking to challenge the conventional wisdom in the energy industry that Canada should still focus on trying to export bitumen to Asian refineries.

The other B.C. refinery proposal is called Kitimat Clean Ltd., spearheaded by B.C. newspaper publisher David Black. Kitimat Clean comes with a $33-billion price tag – $22-billion on an oil refinery, $8-billion on a pipeline and $3-billion on other infrastructure and a tanker fleet. Production is now slated to start in 2022 in Kitimat, compared with an earlier goal of 2020.

Hatch Ltd., commissioned by Kitimat Clean, recently finished a seven-month study of the project and configured designs for what it calls an environmentally friendly refinery. Both Kitimat Clean and Pacific Future Energy are striving to have the “greenest heavy-oil refinery in the world.”

What has yet to be determined is where the financing will come from for the billions of dollars required to build and operate even one B.C. heavy-oil refinery, and the Coastal First Nations have said many aboriginals are nervous about such operations and the associated pipelines.

VANCOUVER — The Globe and Mail
Published Wednesday, Dec. 10 2014, 3:06 PM EST

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Former AFN chief Shawn Atleo adds starpower to Pacific Future Energy – BC BUSINESS

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Advisory board chair Stockwell Day calls First Nations appointments a ‘good start’

Just two short hours after being replaced by Perry Bellegarde as chief of the Assembly of First Nations (AFN), Shawn Atleo was unveiled as the new senior advisor, partnerships, for Vancouver-based Pacific Future Energy Corp.—one of three companies bidding to build an oil refinery on B.C.’s northwest coast.

Atleo made the surprise appearance at a scheduled speech by former federal Conservative cabinet minister Stockwell Day, Pacific Future’s advisory board chair, to the Vancouver Board of Trade on Wednesday. “I have 25 years of experience, the last 15 years directly, in elected politics,” Atleo told the audience in a Q&A after Day’s speech. “Pacific Future is a very important recovery program for recovering politicians,” he said to laughter.

The 47-year-old Vancouver Island native was recently tapped by B.C. Premier Christy Clark to travel the province to engage in “dialogue sessions” about various priorities between First Nations and local and business leaders. At Pacific Future, Atleo joins the management team to help the company build cooperation with B.C. First Nations and bring the project—billed as a “near-zero emissions” refinery—to life.

“I had the privilege, over the last five-and-a-half years—and over a decade at the Assembly of First Nations—to travel to most of the First Nations communities across the country. The little bit that I learned about energy was just enough to be dangerous—and just dangerous enough to join this team. This project doesn’t just have local implications but Canadian and global implications.

“This is about creating a real conversation, as opposed to it being either/or,” he added. “This is about recognizing First Nations as governments—and those conversations, I’m really pleased to say, are going extremely well, because the approach is one that First Nations have been looking for for a long, long time.”

Day, in his speech, also took the opportunity to announce that Ovide Mercredi, another former AFN leader, and Chief Robert Louie of the Westbank First Nation would be joining Pacific Future’s advisory board.

“Some may be saying, ‘That’s a lot of First Nations involvement.’ When I hear that comment, I go, ‘Yeah, it’s a good start,’” said the former Harper cabinet minister. “We believe profoundly, as Shawn will tell you, that involvement with First Nations has to be more than going through the motions. It has to be something that’s heartfelt and believed. We hear about the Williams case and some people talking about that, saying it’s really created a lot of roadblocks and obstacles…. We don’t see that as presenting obstacles. We see that as pointing to a way forward—and Shawn has been particularly helpful with that.”

The Pacific Future refinery, if it goes ahead, would cost $10 billion to build and would process 200,000 barrels of bitumen a day. The company expects a projected $1 billion EBITDA per year from the refinery, and Day argued that the economic conditions—including the U.S.’s recent push to energy self-sufficiency and a burgeoning Asian consumer market—make it the right time to build Canada’s first refinery since the 1970s. “The refineries that are running now have been running for 50, 60, 75 years—and they’re still making money,” said Day. “We say it’s time for Canada. It’s time for all the people of Canada. And it’s time to put our First Nations people front and centre.”

Matt O’Grady | Dec 10, 2014

Company behind B.C. refinery proposal moves to engage First Nations. – Vancouver Sun

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Pacific Future Energy appoints two former national chiefs to advisory positions

Vancouver-based Pacific Future Energy has appointed two former First Nations chiefs to its team.

The company is one of two with ambitious proposals to limit damage from a massive oil spill by refining oilsands bitumen on the B.C. coast and then shipping the lighter, refined products, like gasoline, to buyers in Asia.

The proponents say that in a tanker accident, bitumen sinks to the ocean floor and is thus harder to contain and collect.

Pacific Future, which plans to build and run a $10-billion refinery, faces considerable skepticism, but aims to process 220,000 barrels of bitumen a day in its first module.

On Wednesday, it said Shawn Atleo, former national chief of the Assembly of First Nations, will be a senior adviser and Ovide Mercredi, also a former National Chief, will sit on its advisory board.

“The involvement of First Nations has to be more than going through the motions,” said Stockwell Day, a former federal international trade minister who joined the company in August as a senior adviser.

On a day when crude prices continued to drop after OPEC’s decision against curbing global oil supplies and analysts warned of a slowdown in many capital spending plans, Day told a Vancouver Board of Trade luncheon “there are obviously going to be some momentary challenges to different people depending on where you are on the whole line of activity.”

“If you are in the airlines business right now, this is a good thing for you,” said Day. “This is not a bad thing for us either.”

“For us, it means our raw product per barrel will cost less. Our byproduct will cost less, too, so our margin just moves up and down. The same profit is there.”

“If we were trying to raise money to drill a bunch of wells or get into some new horizontal drilling in a particular area, we would be having a challenge. … But we are going to be refining what is continuing to be needed. Demand for oil products is not dropping.”

Day said, however, that as the U.S. becomes increasingly self-sufficient, there is an even more compelling reason to seek overseas buyers.

He described the demand in Asian countries including China, India and Vietnam as “simply staggering as people move into job markets and become consumers.”

Even though there is talk of a slowdown in these economies, Day maintained that concern needed to be relative.

“If it’s 6.8 per cent growth, (instead) of 7.1 per cent, it is still phenomenal.”

Day said the company, which is backed by Mexican conglomerate Grupo Salinas, is working toward a second round of funding that will take it to 2016.

Its efforts come as Victoria-based David Black, founder and chairman of Black Press Group Ltd., has been trying to get public and government support for his Kitimat Clean Ltd. It also aims to take bitumen from the Alberta oilsands, refine it on the B.C. coast and ship it to Asia.

So far, the publisher has been investing his own money into the venture and said that China’s largest bank, the Industrial and Commercial Bank of China, will help with financing the company’s estimated $21-billion refinery.

By Joanne Lee-Young, Vancouver Sun December 10, 2014
© Copyright (c) The Vancouver Sun

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B.C. heavy oil refinery project names aboriginal leaders as advisors – Financial Post

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CALGARY – Two high-profile aboriginal leaders are expected to join the Pacific Future Energy Corp. proposed heavy oil refinery project in British Columbia in advisory roles.

The company is expected to announce Wednesday that Shawn Atleo and Ovide Mercredi, both former national chiefs of the Assembly of First Nations, will join the Vancouver-based company.

Pacific Future Energy is planning a refinery to process Alberta bitumen. Its first phase would cost $10-billion and process 200,000-barrels-a-day of bitumen from the oil sands that could be transported by rail. The next four phases of the project, which would raise the cost to $34-billion, could be supported by a pipeline.

Mr. Atleo is expected to join its management team as senior advisor. Mr. Mercredi is joining as member of an advisory board chaired by former federal cabinet minister Stockwell Day.

“I see this as a major opportunity to shape a new direction in major project development,” Mr. Atleo said. “The only way a project will proceed is if First Nations are directly involved, and providing their consent and their support, and their full partnership if that is what they choose.”

Mr. Mercredi said there is a great need for a new approach that recognizes traditional lands and territories and “the third order of government.

“Where governments failed, perhaps, developers, industry and the business world can succeed,” he said.

The appointments come as another project, the Northern Gateway pipeline proposed by Enbridge Inc., is planning to offer greater equity participation and control to B.C. First Nations.

Samer Salameh, Pacific Future Energy’s executive chairman, said his company wants to work with Canada’s aboriginal peoples by showing full respect of their inherent rights and title. “We stand in full support of achieving a true partnership with Indigenous Peoples, communities and families,” he said.

Claudia Cattaneo | December 10, 2014 8:31 AM ET

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VANCOUVER – December 10, 2014 — Today, Samer Salameh, Executive Chairman of Pacific Future Energy, announced that Shawn A-in-chut Atleo, former National Chief of the Assembly of First Nations, has joined its management team as Senior Advisor – Partnerships, and Stockwell Day, Senior Advisor, and Chair of Pacific Future Energy’s Advisory Committee, announced that Ovide Mercredi, also a former National Chief of the Assembly of First Nations, has joined Pacific Future Energy’s advisory board.

“We are very excited to have both of these individuals join our company in senior roles,” said Samer Salameh, Pacific Future Energy’s Executive Chairman. “There is only one way to work with Canada’s Indigenous Peoples and that is in full respect of their inherent rights and title. We stand in full support of achieving a true partnership with Indigenous Peoples, communities and families.”

“We have reached a moment that marks an important opportunity for Indigenous Peoples to forge a new energy vision, grounded in our rights and responsibilities, on the global economic stage,” said Chief Shawn A-in-chut Atleo. “First Nations values and principles will shape this long term vision and the potential for a new, more sustainable, energy industry for all British Columbians and Canadians.”

“I am very pleased to join Pacific Future Energy with business visionaries who want to change the development landscape in Canada, said Ovide Mercredi. “There is a great need for a new approach that recognizes traditional lands and territories and the third order of government. Where governments failed, perhaps, developers, industry and the business world can succeed. This is the time to think outside of the status quo. There is much to do to change how business and governance is done here at home. But the good news is that it can be accomplished with visionary approaches, good will and kindness. I look forward to being part of a team that will change the development narrative and make big contributions to the way forward.”

About Pacific Future Energy

Vancouver-based Pacific Future Energy is a company that has been developed to finance, design and construct the world’s greenest oil refinery in British Columbia, Canada. The management team consists of leaders from the venture capital, corporate and government sectors, who share the belief that while it’s in Canada’s national strategic interest to diversify its markets for oil, it should be done in a socially and environmentally responsible manner while ensuring the protection of Canada’s west coast.

For further information or to arrange interviews please contact:

Stephen Smart
Citizen Relations (on behalf of Pacific Future Energy)
Tel: 604-647-6268

Alberta needs B.C. to get its oil to Asian markets, but B.C. doesn’t really need Alberta for much of anything. Or does it? – BC BUSINESS

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Evaluating the politics of pipelines, and the often fraught relationship between Western Canada’s powerhouse provinces

Early in her tenure as British Columbia’s 35th premier, Christy Clark set in motion a plan to grow her province’s national clout by unlocking the West’s energy resources. Along with her counterparts in Alberta and Saskatchewan, Clark unveiled plans to establish B.C. as an “energy powerhouse”—the gateway for Canadian products to reach lucrative Asian markets.

“The Western provinces have a real chance to step up in Confederation,” Clark explained to The Globe and Mail in December 2011 as she prepared for the joint lobbying mission to Ottawa. She wanted to help shape a future where the West would use its wealth of natural resources—not just B.C.’s gas and coal but Alberta’s oil—for the benefit of a stronger Canada: “We recognize the big contribution that the oil sands make to Canada and to our national economy.” Port access to B.C. tidal waters would hold the key—the gateway to Asian markets, especially land-locked oil that’s captive to capricious U.S. markets.

But those nation-building ambitions faded as Clark prepared for a tough election campaign in the spring of 2013. The governing BC Liberals appeared to be headed for defeat, and their leader needed a big idea to capture voters’ attention. The idea she seized on was a made-in-B.C. industry based upon liquefied natural gas. But it would conflict with the movement of Alberta’s oil to the coast. With growing opposition to oil pipeline expansion in her province, Clark needed to keep oil and gas apart. She would create barriers to new oil pipelines while promoting natural gas as the clean and safe alternative.

In the final week of the election campaign, the Liberal leader was in full rhetorical flight. “The pipelines that are of most interest to British Columbians are liquefied natural gas,” Clark told the Globe’s editorial board in early May 2013. “That’s something we can do and we don’t need the federal government and we don’t need Alberta.”

While Clark’s remarks would further irritate intergovernmental relations with Ottawa and Alberta, they did not surprise. Days before she publicly unveiled her “five conditions” in the summer of 2012, Clark phoned Prime Minister Stephen Harper to warn him of her plans, threatening to block either the Enbridge Northern Gateway project or Kinder Morgan’s proposed Trans Mountain expansion if her demands were not met.

Those five conditions set increasingly high hurdles for approval of any new heavy oil pipeline project. The first, approval by federal regulatory agencies, was the easiest. “World-leading” marine and on-land oil spill protection standards are subjective, though new regulations from Ottawa in April go a long way toward satisfying that demand. The fourth condition—aboriginal engagement, participation and accommodation—could be near impossible. And until that is met, B.C. won’t even discuss the fifth condition: a “fair share” of the fiscal benefits to British Columbia.

By drawing a line in the sand, Clark infuriated the Harper government, which has been an enthusiastic booster for the Enbridge proposal. But her carefully crafted position in the 2013 election, in which she campaigned for resource development in general but talked tough on oil pipelines, landed her a new mandate from voters in a province that is so often torn over the competing desires for economic development and environmental protection.

That election is behind her, and the next one is still a safe distance away. But having won re-election with a promise of a debt-free B.C. based on hoped-for LNG riches, the premier still does not want to risk a resource development backlash that could thwart her ambitions.

That presents a tall order for Alberta, for Ottawa and for industry: can they walk Clark back to the point where she wants to unlock the big contribution that the oil sands make to Canada?

The financial stakes of getting Alberta oil to new markets are high, but the returns vary depending on where you live.

The Canadian Energy Research Institute, in a July 2012 report, estimated that by the year 2035, completion of both the proposed Enbridge Northern Gateway pipeline and Kinder Morgan’s Trans Mountain expansion project would generate roughly $680 billion in economic growth for Canada. But by province, the incremental tax benefits look very different, according to the CERI study. While Alberta would reap $133 billion, British Columbia could expect to collect just $2 billion.
62% of Albertans “trust the new Alberta government to properly handle negotiations with B.C. on Northern Gateway.”

Another report, this one by the Calgary-based research firm Wright Mansell in March 2010, looked only at the Northern Gateway project and arrived at a rosier picture: British Columbia could expect to collect $6.7 billion, or 8.2 per cent of the total $81 billion in incremental taxation revenue. While that take is significant, Clark maintains it isn’t really a fair share, especially considering that B.C. would carry 100 per cent of the marine risk and a significant proportion of the land-based risk.

On the surface, Northern Gateway appears to be dead in the water, with B.C.’s premier showing no interest in the fate of the project. Clark has promised voters in B.C. that her government will pay off the provincial debt with LNG riches—and First Nations support for LNG development is critical. That support could collapse if the B.C. government is seen to support oil pipelines. “You do one at the cost of the other,” says one Clark government insider.

And yet, there is a potential storyline where the B.C. government could, in the final chapter, come around to support the expansion of Alberta bitumen products crossing the Rockies to the coast.

B.C.’s five conditions for the approval of new heavy oil projects add up to a relatively short manifesto—one that was quickly dismissed by critics as a desperate shopping list from a premier who wasn’t expected to survive the last election. Today, they look more like an adroit political creation: just vague enough that the door remains open a crack, if Alberta, Ottawa and industry each plays the role scripted for them by the Clark government. The conditions require stricter environmental standards from Ottawa, meaningful accommodation of First Nations’ interests and a bigger financial share of the benefits for British Columbia. If all of that can be done, the B.C. premier will be able to say that she fought for her province and won. If the efforts don’t win over British Columbians, however, she still has the option of saying no to an unpopular development.

Already, Clark can claim some progress. In the spring, the federal government announced measures designed to answer B.C.’s demands for tougher regulation of oil spills on land or at sea. On the East Coast, Transport Minister Lisa Raitt announced a series of measures in mid-May aimed at bolstering tanker safety, including a requirement that industry pay all cleanup costs in the event of a spill. The next day, Raitt was on the West Coast promising tougher regulations for pipelines, giving the National Energy Board increased regulatory control over the 73,000 kilometres of pipeline that transport more than $100-billion worth of oil, gas and petroleum products across Canada each year.

These changes are the result of what the B.C. government calls its “constructive federalism,” even if the province never comes around to supporting Northern Gateway, it will have nudged the nation toward more stringent environmental protection for the movement of heavy oil. “If the five conditions were implemented, Canada’s environment would be safer from coast to coast,” says one B.C. official. “This would be our gift to Canada from B.C.—this will be the legacy item.”
62% of Albertans “would be OK with B.C. getting a share of oil revenues from Northern Gateway.”

Meanwhile, Enbridge officials have finally come to understand that they need to tread more carefully in B.C. and have offered assurances to the B.C. government that they will try not to start a conflagration as they wade through the National Energy Board’s conditions—a process that will likely carry on through 2015.

The governments of Alberta and B.C. have a group of senior bureaucrats also working together on how to address Clark’s five conditions. Part of Alberta’s objective, here, is to develop a national dialogue around the economic benefits of natural resource development that isn’t drowned out by the politics of pipelines in B.C. “This isn’t just about LNG, oil, mining or forestry. It’s about natural resource development generally, and it is essential for the West to be able to move forward with that development,” says one Alberta official. “Nationalizing that conversation needs to happen.”

In B.C., the economic benefits of resource development have long generated a debate about the cost to the environment. For decades, politicians have struggled to span the gap between job creation and green values.

At a speech last March at a Globe Conference in Vancouver—a gathering of “environmental business” interests—Clark used her stance on oil pipelines to demonstrate that her government is straddling the two often-conflicting positions.

“British Columbia is very much open for business,” she told the delegates. “We are open for business, in particular the business of leaving our province, our country and our world in better shape than we found it.”

She reminded her audience of the “war in the woods”—a protest over logging old-growth forests in Clayoquot Sound on Vancouver Island that spread and threatened to grind the province’s forest industry into the ground with civil disobedience and international boycotts in the early 1990s. Clark said successful resource industries have learned from that battle that, in her province, they have to earn social licence. “The industry did not shrink from those challenges. Instead, they found a way to grow, a way to collaborate, a way to cooperate and a way to do it right. And so now, today, forestry is again a very profitable business in our province because they are innovating. They are embracing change.”

Clark’s comments were not just for the benefit of her audience that day. It was also a message to the oil industry and to the government in Alberta.

Alberta Premier Jim Prentice—the former Conservative MP who served variously as Stephen Harper’s minister for Indian affairs, industry and the environment—won the leadership of the Alberta Progressive Conservatives in September on the promise of pursuing new oil pipeline capacity as his top priority. He is familiar with the obstacles faced in B.C. during his brief stint, early in 2014, as an envoy for Enbridge, tasked with trying to repair relations with First Nations on the West Coast.

Prentice knows that opposition won’t easily be overcome. He sees Clark’s five conditions as a guidebook to understanding what B.C. wants, and what changes are needed, to earn social licence. “Legitimate questions have been raised about protection of the environment and the role of the First Nations in environmental protection and economic partnership,” he says. “I always felt that the markers designed by Premier Clark would need to be addressed.”

Prentice was out of politics when Clark made a splash with her five conditions for approving oil pipelines in 2012. Today, he says he wishes his predecessor, Alison Redford, had recognized more quickly that B.C. had actually created a vehicle for pipelines to move ahead, not an obstruction.
38% of British Columbians say the Enbridge Northern Gateway project should proceed.

“I thought it was unfortunate we didn’t make more progress,” he says. He notes that he has been delivering the same message for five years—be it in federal politics, in private industry or wearing his hat for Enbridge. “I have repeatedly pointed out there will be no access for Alberta’s energy resources to the tidewater on the West Coast unless there is a meaningful partnership with First Nations and a recognition of some of the issues that Premier Clark has put forward.”

With the deep opposition to the Enbridge project in particular, the B.C. government appears comfortable to stay out of the fray—leaving it to industry and other governments to resolve the remaining issues. The accommodation of First Nations’ interest will likely prove the most difficult of B.C.’s five conditions to address, but there remains the contentious issue of just how much B.C. is due as a “fair share” of the financial benefits. Clark is waiting for industry to make the “what’s in it for us” case to British Columbians; the province has never said just what that share should be, only that the expected slice of the pie isn’t enough.

In the end, weighing the risk against the benefit will be a complex formula, and it will ultimately be decided at the political level—and in the boardroom. Alberta has already made it clear that it will not share its royalties, so B.C. is expecting pipeline proponents to stand and deliver. Whether it is Kinder Morgan or Enbridge, or some other new champion of an oil pipeline, B.C. is waiting for an offer it can’t refuse.

One former politician with an intimate understanding of all these competing interests is Stockwell Day. The former federal Conservative MP from B.C. is also a former cabinet minister in the Alberta government and played an important role in Clark’s electoral victory in 2013, campaigning at the BC Liberal leader’s side to help her shore up her party’s right-of-centre support. Using his political connections in Edmonton, Victoria and Ottawa, Day has been working behind the scenes as a broker, trying to forge some common ground between the two provinces and the federal government. (Day is also a senior advisor to Pacific Future Energy, a Vancouver company that hopes to build a $10-billion “green” oil refinery along B.C.’s north coast.)

Day sees a path for more Alberta oil to reach B.C.’s ports. As an insider in the BC Liberals’ 2013 election campaign, he followed the party’s intensive polling on the oil pipeline issue that helped Clark craft a position that she could sell to voters. “We did a lot of polling before and during the election,” he says. “One of the things we really drilled down into was the whole issue of social licence. What we found was the majority of British Columbians said, If it is safe environmentally, if First Nations have been properly dealt with, and if there is a net economic benefit—that’s the trifecta—then the support for a pipeline is there.”

The five conditions happen to cover that trifecta. “It was brilliant politics on the part of Premier Clark to be standing up for British Columbia and the environment and saying it’s not going to happen without these five conditions. But the really brilliant part is that it was also the right thing to do.”

Tempering his praise, Day offers the premier a cautionary note against overplaying her hand. Does B.C. need Alberta and its oil dollars? Maybe not today, but perhaps tomorrow: “As hopeful as we are about LNG in B.C., people are realizing you can’t put all your energy eggs in one pipeline.”
Talking pipelines

Details from an exclusive survey by Insights West for BCBusiness and Alberta Venture

We asked market research firm Insights West to poll Albertans and British Columbians on their attitudes regarding pipelines. For pollster Mario Canseco, two things stood out: one, Albertans were almost as concerned about the environment as their crunchy-granola neighbours (with 59 per cent of Albertans believing it was more important to protect the environment than foster economic growth, compared to 65 per cent of British Columbians). “This notion of the economy taking priority over environmental issues is not supported by a lot of people in both provinces,” says Canseco.

And second? Sixty-two per cent of Albertans are willing to give B.C. a share of oil revenues from Northern Gateway—one of B.C. Premier Christy Clark’s five conditions for getting a pipeline built but a demand vehemently opposed by former Alberta premier Alison Redford. Canseco thinks it might have something to do with the more conciliatory tone set by new Alberta premier Jim Prentice. “There’s a lot of trust in him to do the right thing and handle negotiations properly.”

The survey of 802 British Columbians and 705 Albertans was conducted Oct. 3-8, 2014. Margins of error are +/- 3.5% and +/-3.7% for B.C. and Alberta, respectively.

Justine Hunter | Nov 17, 2014

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The Heart of the Matter


A New Way of Doing Business with First Nations:
Interview with Jeffrey Copenace

Pacific Future Energy’s commitment to build and operate the world’s greenest refinery on British Columbia’s north coast is motivated by their belief that it is in Canada’s national strategic interest to gain access to international markets for Alberta’s oil, especially the fast growing Asian markets.

They are firm in their beliefs it shouldn’t be done at the sacrifice of BC’s coast or broader environment, and that it must be done in full partnership with First Nations. In regards to building those partnerships with First Nations, their beliefs attracted Jeffrey Copenace to join their team as the Senior Vice- President of Indigenous Partnership.

Download the full article (PDF) here:  The Heart of the Matter