‘This will be not only a financial investment, but also a return for our Nation . . . This is an opportunity for us to manage prosperity, as opposed to managing poverty’
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More than five years ago, after then-Suncor Energy CEO Steve Williams opened the company’s long-awaited $17-billion Fort Hills mine, he told reporters the company wasn’t done building major oilsands projects in Alberta.
A lot has changed since then, including the collapse and recovery in oil prices, growing climate concerns, prognostications of peak demand and the imminent completion of the Trans Mountain expansion.
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During that time, not a single greenfield oilsands mine has moved forward.
But Fort McKay First Nation Chief Raymond Powder hopes that might change.
The First Nation has signed a memorandum of understanding to examine “a prospective oilsands mine development on our reserve,” Powder said Thursday in an interview.
And it inked the deal with Suncor.
“Fort McKay First Nation wants to continue growing, just like any other First Nation or other communities right across Canada,” he said Thursday.
“This will be not only a financial investment, but also a return for our Nation . . . This is an opportunity for us to manage prosperity, as opposed to managing poverty.”
The agreement is a preliminary step that would explore a prospective development on an oilsands lease about 20 kilometres northeast of Fort McKay.
The property is smack dab in the middle of several oilsands developments in the vicinity. It was considered for possible joint development by Shell Canada in 2006, although that venture didn’t proceed.
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 the recoverable bitumen.
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Suncor executive vice-president of oilsands Peter Zebedee said the agreement could potentially provide the company’s existing operations — including the nearby Fort Hills mine, along with Syncrude’s Aurora operations — with bitumen supply options past 2040.
(Suncor owns 58 per cent of Syncrude and is the operator of the joint venture.)
Zebedee said the company is still in the early stages of assessing the resource and completed its first drilling season, with more work coming up next year. That will provide necessary technical information to the partners by the end of 2025.
“It’s really too early to say what the commercial opportunities are,” Zebedee said.
“But given the proximity of this lease to both the Syncrude Aurora operations, as well as our Fort Hills assets, there are some synergies we would be looking to extract that are promising from an economic standpoint.”
Powder noted Nation members held a referendum on the use of the land as part of its treaty land entitlement settlement in 2003, and they supported it being earmarked for oilsands development.
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He said the agreement is a strategic partnership with Suncor, one of the country’s largest oilsands producers.
“Fort McKay would not be able to do this independently because we don’t have the resources, nor the experience. And so we’re utilizing and capitalizing on that relationship we have with Suncor,” he added.
In 2017, Fort McKay and the Mikisew Cree First Nation independently financed $545 million to buy a 49 per cent stake in Suncor’s oilsands storage facilities.
Fort McKay, which has 900 band members, has built up several successful companies that are active in the energy industry.
However, developing an oilsands project would give the Nation direct control over the sector’s development and environmental standards.
“It would leverage the opportunities to actually be in the driver’s position,” Powder said.
“We can have that authority and that sovereignty, asserting our positions with respect to stewardship of the land and the water and the air.”
Greg Stringham, former vice-president of oilsands at 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 am glad to see this is moving ahead,” he said.
“It would give them a much more detailed level of control over their own mine.”
It won’t be simple, however.
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 pitched 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 on getting federal approval in 2020, less than one 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 CEO at the time, said it had become clear there was no path forward for the project.
Advancing a new oilsands mine in Canada today would be a “significant uphill battle,” given federal policy, said oilsands expert Ben Brunnen, a partner with Garrison Strategy.
“When Frontier was set to be finalized, it had the best emissions profile and an exceptionally strong First Nations relationship,” he said.
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“If Frontier can’t advance, what can? That really is the question here.”
Alvaro Pinto, CEO of the Fort McKay Oilsands Development Project, noted the federal government recently amended the 2007 Fort McKay First Nations oilsands regulations.
The project, if approved, could begin operating by around 2036.
Premier Danielle Smith said the agreement and potential for a new oilsands project is one that the provincial government supports, noting it would generate additional revenues for the Fort McKay First Nation.
“To see a proposal where a band is going to be in on the ground floor of production, it just warms my heart,” Smith told reporters Thursday.
“I would hope that the federal government wouldn’t stand in the way of the aspiration of a First Nation to develop their own source revenue . . . I do hope we do see more of it.”
Chris Varcoe is a Calgary Herald columnist.
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