The unprecedented level of oil and gas activity under way and planned in Western Canada has worsened the uneasy relationship between the energy sector and Canada’s First Nations.
Many aboriginals are opposed. They complain it brings change to their way of life and to the lands and waters they have known and relied upon for centuries. Their experiences with corporations and governments have been negative and trust is scarce. Projects like the Northern Gateway pipeline have provided platforms to vent anger.
Energy companies don’t get why many aboriginals don’t welcome their promises of riches. They handle relations with care, aware that leverage to persuade is small, conflict could explode and lead to costly delays. Poor and often changing aboriginal leadership, increasing demands for compensation, armies of consultants and lawyers feed the tension.
Adding to the problem is that companies that find successful practices tend to keep them under wraps, regarding them as competitive advantages, so less experienced companies make mistakes that give the whole industry a black eye.
Yet next to Canada’s energy sector itself, First Nations could be the top beneficiaries of energy development. They are in the right place at the right time.
Some First Nations have figured it out, providing a measure of what’s possible. The 700-member Fort McKay band in Alberta is the poster child for successful aboriginal involvement in oil development. Its companies spin off revenues of $100-million a year and employ 4,000 people in oil sands related services. The Haisla Nation in Kitimat has successfully embraced the liquefied natural gas opportunity, as equity owner and partner in two projects.
A Vancouver-based Fraser Institute study by Ravina Bains, Opportunities for FirstNations Prosperity Through Oil and Gas Development, released Thursday, offers a road map for more positive outcomes.
With 600 major resource projects worth an estimated $650-billion planned for Canada, First Nations could land jobs, business opportunities and increase their standard of living. They have disproportionate numbers of young people and live in scarcely populated areas where the projects are planned. They are available to work.
On average, the unemployment rate in First Nations communities is 23%, the study says, compared to 7.1% for Canada’s population. The aboriginal unemployment rate is even higher in communities targeted for oil and gas development. In British Columbia, where resistance to energy development has been highest, the unemployment rate is nearly 33%, the study says.
In terms of new projects alone, there are seven major ones in the planning stage In British Columbia that could benefit 56 of the province’s 198 First Nations. In Alberta, five new major oil projects could benefit 20 out of 45 First Nations. In Saskatchewan, two projects could impact 16 First Nations. Indeed, every single oil and gas project proposed in Western Canada will have an impact on at least one First Nations community, the study says.
With so much promise of mutual gain, why the tension?
The study highlights some reasons: Oil jobs require education and specialized skills training, but less than half of First Nations’ youth graduate from high school. Social assistance programs are now being reformed, but until recently “were a passive cheque-cutting process.”
There has been a failure by industry to appreciate the need for building good relations, a reason many disputes are landing in the courts.
The courts have created “doctrines,” such as the duty to consult, that have expanded the rights of First Nations, but not spelled out what they involve — and governments haven’t either.
“Corporations are left to develop their own consultation policies and procedures,” writes Bains, associate director of aboriginal policy studies. “Until governments, both provincial and federal, outline specific policies and methods to fulfill the duty to consult, there will continue to be ambiguity for industry partners regarding how to fulfill that duty.”
Still, some practices have shown promise.
According to the study, they are: ongoing communication and acceptance that there will be discussion, a commitment to the engagement process, ensuring communities are ready to capture opportunities, flexibility and, most importantly, developing an understanding of First Nations communities.
Some would also recommend engaging First Nations early in the process, looking for ways to make First Nations meaningful partners, and being respectful.
Failure to obtain the so-called social license to operate – and First Nations are a big part of that – is regarded as the biggest risk to energy projects in Canada today. It’s a tough challenge. Yet there has never been as much motivation on the part of industry and government to find common ground with First Nations and solve problems. It would be a shame if First Nations failed to realize that.