Fort McKay, Brion Energy reach out-of-court agreement

Fort McKay First Nation and Brion Energy will not be going to court.

The two signed an agreement on Feb. 21 for the development of the Dover oil sands project, four months after the Alberta Court of Appeal ruled that the First Nation could argue Constitutional and treaty rights in its appeal of the Alberta Energy Regulator’s approval of the Dover project, a 250,000-barrel-per-day thermal oilsands venture. Counsel for Fort McKay had expected the appeal to be heard by June 2014.

Neither party will say whether pending court action was an incentive to reach a settlement. At the time of the court’s decision, Fort McKay First Nation CEO George Arcand Jr. said that the First Nation and Brion Energy, which is joint venture between Athabasca Oil Corp. and Phoenix Energy Holdings Limited, would continue talks, which had been ongoing for two years.

“For us it was important that we reach a settlement, period,” said Krista Baron, senior communications advisor with Brion Energy.
“In a large part because Fort McKay First Nation, in fact the whole Fort McKay community, has had a long standing relationship with industry in general so we very much wanted to get off on the right foot and build that relationship.”

The details of that agreement are confidential. Discussions have been held with the community “but up to a certain level…. We had limitations on what we could disclose or not,” said Alvaro Pinto, who is lead negotiator for long term agreements with industry for Fort McKay First Nation.

However, Pinto says the agreement does not include the no-development zone around Moose Lake that the First Nation had been pushing for.

“To get the 20-kilometre buffer zone that would have to come from the government,” said Pinto, who noted such a zone would impact other existing leases in the area and not only the Dover project. “We’ve been in negotiations with the government for probably about a year and a half.  We will continue talking to the government about that.”

Even though there is no buffer zone, Pinto says the agreement is heavy on environmental measurements to protect the Moose Lake reserve, which include implementing best-management practices, access management control, and risk assessment.

“The most important aspect of this agreement was not the fiscal component, it was the environmental component. In fact, we didn’t even start discussions around the fiscal or business components until we got done with the environmental component because we wouldn’t have had an agreement at all,” said Pinto.

Baron said Brion Energy has “committed to supporting the growth of business within their community,” which could mean employing Fort McKay members for work on the project as well as contracting Fort McKay businesses.

Brion Energy is the first leaseholder in the Moose Lake reserve to move ahead with a project, says Pinto, and this agreement would serve as a “very strong” base for further development by the oil and gas industry.

“That’s our expectation,” he said.

“The agreement has been watched quite carefully, the whole situation, by other companies,” said Baron, although she fell short of saying Brion’s agreement could have an impact on other potential business in the area. “Really it’s a question of what Fort McKay deems important especially in its business relationships with other companies.”

AER approved Brion’s Dover Commercial Project in August 2013. Now that Fort McKay First Nation has removed its objections to the development, the project is only awaiting an Order in Council from the province.