Indigenous engagement charts positive course for oil and gas industry

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Much as opponents of Canadian oil and gas production hate to admit it, the future of the industry appears to be set.

Construction on the Coastal GasLink pipeline to Kitimat, B.C., continues. Work on the Trans Mountain pipeline is well advanced. The Canadian portion of Enbridge’s Line 3 is essentially finished.

Protests killed the Northern Gateway project several years ago and new U.S. President Joe Biden has done the same to the Keystone XL pipeline to the U.S.

Recent developments also make clear that Indigenous peoples will be major players in the future of the Canadian energy sector. With support from the Alberta Indigenous Opportunities Corp., Alberta First Nations recently invested in a new $1.5-billion natural gas power plant. The same fund provided $1 billion in capital for investment in the Keystone XL.

The First Nations Major Project Coalition and some of its members are involved with investments in the Coastal GasLink project and other energy initiatives. The Squamish First Nation has made a major commitment to the Woodfibre LNG (liquefied natural gas) plant, just as the Haisla First Nation is a keen supporter of the LNG Canada project.

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Even larger investments may be in the offing, led by several well-co-ordinated Indigenous efforts to invest in Trans Mountain. Indigenous entrepreneurs are behind other large-scale pipeline and energy infrastructure proposals. The now-postponed Frontier oil sands project developed by Teck Resources had substantial support from First Nations and Métis communities in the area. Other plans are on the drawing table.

Debate about the future of Canadian energy production continues, of course. Some environmental critics have argued, contrary to market forces and investors, that global demand will make some of this new capacity unnecessary. The complicated situation of the Wet’suwet’en people remains unresolved, in part because of the hotly contested decisions of the governments of Canada and British Columbia to negotiate with hereditary chiefs rather than elected chiefs and councils.

Furthermore, the approach of the Trudeau government to the energy sector is uneven at best, with the full effect of changes to regulatory and approval processes in Bill C-69 and the incautious implementation of the United Nations Declaration on the Rights of Indigenous Peoples still to be determined. Anticipated climate change initiatives could further undercut the stability of the oil and gas sector.

It remains to be seen whether other imperatives, including the attempt to recover from the pandemic-induced recession, convince the government to tone down some of their interventions.

At the centre of these discussions should be the transformative roles being played by Indigenous peoples. A few decades ago, First Nations and Métis were largely on the outside of the oil and gas industry; benefits were largely limited to those with energy production on reserve and proximate to the major oil sands project and natural gas fields. The new reality is strikingly different, with comprehensive community engagement prior to establishing extensive partnerships.

For more than a generation, Indigenous people fought for an appropriate place in the Canadian energy sector. They worked hard and long, with no easy concessions made to them along the way. First Nations and Métis converted legal victories into commercial opportunities and managed to forge for themselves a significant role in the future of the oil and gas industry.

If the current arrangements were in place 30 years ago, First Nations and Métis communities would have gained billions of dollars in own-source revenues, many business opportunities and hundreds if not thousands of long-term jobs. It’s painfully ironic that Indigenous peoples have created space for themselves in an industry with an uncertain future and, at least for now, less than optimal financial returns. It’s not lost on these communities the role that the federal government’s meddling has to play in creating uncertainty and undermining the industry’s viability.

The current state of Indigenous engagement in the oil and gas industry presents a formidable challenge to environmentalists and those opposed to the further development of the energy sector. The environmental movement has repeatedly declared its commitment to Indigenous peoples but the opaqueness of this stance has been exposed.

Based on existing patterns, it seems clear that the environmentalists support Indigenous peoples only when the First Nations and Métis adopt strong environmentalist positions. Will they back down when Indigenous communities support the projects?

If not, they must stop presenting themselves as stalwart defenders of Indigenous rights.

The path forward for Indigenous involvement in the energy industry appears to have been defined. With proper engagement, suitable environmental protections and adequate returns to the communities, Indigenous peoples are prepared to participate actively. They will benefit from improvements in energy prices and the increased access to global markets associated with the completion of pipelines. Indigenous communities, likewise, will pay a significant price if the oil and gas markets stumble.

Canada’s oil and gas industry had been put on a different course through Indigenous engagement. The sector now shares, with mining, some of the most positive Indigenous relationships in the Canadian economy. The transformation over the past generation has been truly impressive.

And the sector’s future is surely a bright one, relying substantially on continued Indigenous engagement, mutually beneficial arrangements, and a shared effort to overcome the sustained criticism of the industry.

Ken Coates is a Munk Senior Fellow at the Macdonald-Laurier Institute.

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