Alberta First Nation signs deal with Suncor to explore tar sands mine

‘This will not only be a financial investment, but also a return for our Nation. . . This is an opportunity for us to manage prosperity, instead of managing poverty.

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More than five years ago, after then-Suncor Energy CEO Steve Williams broke ground on the company’s long-awaited $17 billion Fort Hills mine, he told reporters the company wasn’t done yet. to build major oil sands projects in Alberta.

Much has changed since then, including the collapse and recovery of oil prices, growing climate concerns, forecasts of peak demand and the imminent completion of the Trans Mountain expansion.

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During that time, not a single new tar sands mine has moved forward.

But Fort McKay First Nation Chief Raymond Powder hopes that will change.

The First Nation signed a memorandum of understanding to examine “a possible development of a tar sands mine on our reserve,” Powder said Thursday in an interview.

And signed the agreement with Suncor.

“Fort McKay First Nation wants to continue to grow, just like any other First Nation or other communities across Canada,” he said Thursday.

“This will not only be a financial investment, but also a return for our Nation. . . “This is an opportunity for us to manage prosperity, instead of managing poverty.”

The agreement is a preliminary step that would explore possible development on an oil sands lease about 20 kilometers northeast of Fort McKay.

The property is right in the middle of several tar sands developments in the surrounding area. Shell Canada considered a possible joint development in 2006, although that venture did not come to fruition.

As part of the new agreement, Suncor will conduct early-stage technical and feasibility assessments, including a drilling program, to examine the size and quality of recoverable bitumen.

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Suncor oil sands executive vice president Peter Zebedee said the deal could provide the company’s existing operations, including the nearby Fort Hills mine, along with Syncrude’s Aurora operations, bitumen supply options after 2040.

(Suncor owns 58 percent of Syncrude and is the operator of the joint venture.)

Zebedee said the company is still in the early stages of evaluating the resource and has completed its first drilling season, with more work to come next year. This will provide the necessary technical information to partners by the end of 2025.

“It’s really too early to say what the business opportunities are,” Zebedee said.

“But given the proximity of this lease to both Syncrude Aurora’s operations and our Fort Hills assets, there are some synergies we would look to extract that are promising from an economic standpoint.”

Powder noted that Nation members held a land-use referendum as part of their land rights agreement in 2003, and supported putting it toward tar sands development.

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He said the deal is a strategic partnership with Suncor, one of the country’s largest oil sands producers.

“Fort McKay couldn’t do this independently because we don’t have the resources or the experience. And that is why we are using and capitalizing on that relationship that we have with Suncor,” he added.

In 2017, Fort McKay and the Mikisew Cree First Nation independently funded $545 million to purchase a 49 per cent stake in Suncor’s tar sands storage facility.

Fort McKay, which has 900 band members, has created several successful companies operating in the energy industry.

However, developing an oil sands project would give the Nation direct control over the development of the sector and environmental standards.

“I would take advantage of opportunities to really be in the driver’s position,” Powder said.

“We can have that authority and that sovereignty, asserting our positions regarding the stewardship of land, water and air.”

raymond powder
Chief Raymond Powder of the Fort McKay First Nation speaks at a news conference in Edmonton following the signing of a memorandum of agreement with Suncor on March 7, 2024. Image provided by Suncor Energy

Greg Stringham, former vice-president of tar sands for the Canadian Association of Petroleum Producers, said the Fort McKay lease has been discussed as a potential development dating back more than a decade.

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“I’m glad to see this moving forward,” he said.

“It would give them a much more granular level of control over their own mine.”

However, it won’t be easy.

Aside from the huge upfront capital costs to develop a mine and questions about future oil demand in the coming years, the political hurdles appear enormous.

The ill-fated Frontier oilsands mining project was submitted by Vancouver-based Teck Resources and approved by a joint federal-provincial review panel.

After spending more than $1 billion advancing the project, Teck gave up seeking federal approval in 2020, less than a week before the Trudeau government was expected to make a final decision.

The $20.6 billion project had signed support agreements with all 14 indigenous groups in the area.

Don Lindsay, Teck’s chief executive at the time, said it had become clear there was no path forward for the project.

Pushing for a new tar sands mine in Canada today would be a “major uphill battle,” given federal policy, said tar sands expert Ben Brunnen, a partner at Garrison Strategy.

“When Frontier was scheduled to be completed, it had the best emissions profile and an exceptionally strong relationship with First Nations,” he said.

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“If Frontier can’t move forward, who can? “That’s really the question here.”

Alvaro Pinto, executive director of the Fort McKay Oil Sands Development Project, noted that the federal government recently amended the 2007 Fort McKay First Nations oil sands regulations.

The project, if approved, could begin operations around 2036.

Premier Danielle Smith said the deal and the potential for a new tar sands project is one the provincial government supports, noting it would generate additional revenue for the Fort McKay First Nation.

“To see a proposal where a band will be on the ground floor of the production, it just warms my heart,” Smith told reporters Thursday.

“I hope the federal government does not stand in the way of a First Nation’s aspiration to develop its own income. . . I hope we see more of this.”

Chris Varcoe is a columnist for the Calgary Herald.

[email protected]

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