While many First Nations and Bands in central and northern BC are just now exploring opportunities in the oil and gas sector, FNFN through its construction company, Eh-Cho-Dene Enterprises, and its fifty per cent ownership of a drilling rig, has been an active player in the industry for more than 30 years.
With an increasingly diversified business portfolio, FNFN is generating revenues to support a wide range of community goals, services and programs. Just as importantly, through its participation and partnerships in the oil and gas sector, FNFN is also providing greater land use certainty in northeastern BC while simultaneously ensuring that resource development on its traditional territory occurs in a manner that respects FNFN’s goals and vision for their land and for their people.
EH-CHO DENE ENTERPRISES
In 1982, FNFN was looking for economic opportunities to generate revenue. When a local logging construction company was put up for sale, the Nation used revenues from log sales to purchase the company along with its shop and equipment. The company was renamed Eh-Cho-Dene Enterprises and began operations with two primary goals: to provide employment for First Nation members, and to increase its equipment base.
Using a small collection of bulldozers, Caterpillar heavy equipment, and 16 newly-hired Nation members, Eh-Cho-Dene’s first job was a clearing contract in the forest industry. Unfortunately, due to its inexperience and lack of connections, it was difficult for Eh-Cho-Dene to generate new business and, for the next two decades, the Nation carried the company financially, as it was not yet profitable.
Eh-Cho-Dene’s fortunes improved when it hired a manager with oil and gas industry experience to secure more contracts. Along the way, its workforce gained experience and, as BC’s oil and gas industry grew in Northeastern BC, so did Eh-Cho-Dene.
Today, the company is a major contractor in the Fort Nelson area, with a staff that includes experienced supervisors, project managers, mechanics, operators, labourers and office personnel.
As for FNFN equipment holdings, Eh-Cho-Dene has a nine-bay shop with full facilities and licenced mechanics that support a fleet of more than 200 pieces of heavy equipment such as excavators, dozers, loaders, graders, tractors, trailers, back hoes and rock trucks.
While Eh-Cho-Dene originally serviced the forest industry, forestry became non-existent in the area after Canfor ceasing operations of its Fort Nelson OSB plant in 2008 and the subsequent closure of the Tackama plywood plant in 2011. Eh-Cho Dene now specializes in road, lease and oilfield construction, seismic cutting, excavations and land clearing.
In the winter of 2011, the company had 150 full-time employees. Today, that number is down to around 50, due to a drop in natural gas prices, which has prompted oil and gas companies in the Northeast to scale back operations. One example of note is that Enbridge has halted construction of its $1.15 billion Cabin gas processing plant project near Fort Nelson until the natural gas market recovers.
Despite the current downturn, FNFN has reasons to be optimistic regarding its fortunes in the oil and gas sector. One reason is the expected rise in demand for Horn River gas once liquefied natural gas export facilities are built on BC’s west coast. Another reason is the ongoing success of a drilling rig partnership with Ensign Energy, a venture which has played a key role in helping FNFN generate revenue and achieve the goals outlined in its community plan called “Reaching for Our Vision”.
REACHING FOR OUR VISION
In the late 1990s, the Fort Nelson First Nation decided it needed to develop a comprehensive plan in order to assess its current state of affairs, where it wanted to go as a Nation and how get there. The Nation began by hiring a professional community planner using funds provided by an Aboriginal Affairs and Northern Development Canada (AANDC) planning assistance program.
Over a period of months, FNFN held hundreds of community meetings to solicit input from the community about a wide range of issues such as housing, culture, education, Elders, addiction, as well as economic development. The meetings varied widely in format from community meetings and focus groups, to door-to-door visits and “kitchen table” with members discussions in their homes.
For Kathi Dickie, who served for more than a dozen years as Councillor and Chief, the months-long community engagement process was as important as the statements that define the Reaching for our Vision plan.
“It was important because that process made it [the community’s] plan, it was not coming from above. In the report, community members could see their words and opinions. That was very important.”
In 2000, FNFN unveiled the following 12 strategic goals as part of its Reaching for Our Vision statement:
- To prevent and address the abuse of drugs and alcohol
- To increase the quality and quantity of the community’s housing stock
- To address environmental health concerns
- To improve the communication between FNFN and its members
- To revitalize the Nation’s traditional languages and cultures
- To provide increased supports for Elders
- To provide additional supports to youth, particularly high school students
- To promote “meaningful employment” opportunities
- To address community safety concerns
- To promote community support networks and volunteerism
- To improve the community’s physical infrastructure
- To include members living off-reserve in the FNFN community
While the 12 community-based initiatives continue to guide the actions and policies of FNFN, the plan will be revised in 2013 to address new areas of interest and concern to the Nation.
According to Dickie, a key part of the economic strategy was not just identifying areas the Nation did want to be involved in, but also identifying areas that the community declared were off limits as potential revenue generators, such as casinos and unsustainable forestry operations. One key area that FNFN did want to get involved in was the Northeast’s growing oil and gas sector.
EHT’ONI DRILLING RIG
In the early 2000s, the legal landscape was changing regarding Indigenous rights and title, with the courts increasingly recognizing the duty of the Crown and companies to consult and accommodate First Nations regarding the development of resources on their traditional territory. In the oil and gas sector, particularly in Alberta, this led to numerous partnerships between drilling companies and First Nations.
In British Columbia, Fort Nelson First Nation was also being courted by oil and gas companies which recognized that FNFN’s traditional territory included areas with immense natural gas reserves, such as the Liard and Horn River basins.
To assess their offers and ensure prospective partners shared FNFN’s respect for the land and commitment to sustainable development, FNFN brought in external expertise to conduct due diligence. They also spoke to First Nations involved in the oil and gas sector in Alberta for their feedback on prospective partners.
Speaking about the partnership process in an AANDC documentary, Dickie said, “… you really have to take your time, do your due diligence and check into the company, like what do they bring to the table, what type of reputation do they have, and is it someone you can work with and not compromise your principles and your values. The qualities that we wanted were someone that respected us, valued us in terms of seeing us as a partner, and not just as a blank cheque to get into traditional territory.”
FNFN chose to proceed with a drilling rig project proposed by Ensign Energy, a world leader in drilling rigs and oilfield services, which was seeking to expand its area of operations. The proposal would see Ensign and FNFN become 50/50 co-owners of an $8 million drilling rig which would carry out drilling contracts for oil and gas companies. One of the first clients for the rig was Encana, who was the biggest oil company in western Canada at the time. In addition to helping create the partnership, Encana also helped facilitate FNFN’s access to capital to purchase the rig.
“[Encana] basically played a dating service and brought the two of us together,” said Dickie. “We evaluated their relationship with Ensign and we compared it to others and basically thought this is a good one for us to get into, our community would benefit from this agreement.”
To pay for its $4 million portion of the new rig, FNFN contributed $2 million in equity, in part through AANDC equity program funding. It also secured $2 million in financing from a major mainstream bank. The loan was facilitated by a strong global demand for energy, the credentials of major corporations like Ensign and Encana, and a two-year contract Encana signed with the partners to use the rig. The contract included a “best efforts” clause, which guaranteed the Ensign-FNFN rig would be “first up and last down” (the first drill to begin drilling and the last one to stop) on any project.
The rig was assembled on FNFN’s reserve and commissioned in December 2003, making FNFN the first Indigenous group in BC to own and operate an oil and gas drilling rig. The contest to name the rig was won by a Grade 3 student at FNFN’s Chalo School. Because it pointed to the sky, she called the rig Eht’oni, the Dene language word for “arrow”.
While FNFN are co-owners of the rig and share the net profits equally with Ensign, Ensign continues to be responsible for all decisions related to its operation. FNFN’s financing for the rig was paid off in 2011 and, with an average lifespan of 17 years, the Eht’oni rig is expected to continue generating revenues for the Nation until 2020. The rig goes where the work is and, in 2013, was operating between Calgary and Red Deer.
LIARD HOTSPRINGS LODGE
Just as the Eht’oni rig began operations in 2003, Fort Nelson First Nation identified an economic development opportunity in the tourism sector when the Liard Hotsprings Lodge was put up for sale. The lodge is located 160 km west of Fort Nelson, in territory FNFN shares with the Bands and First Nations of the Kaska Dena Council.
The 21-unit, 6,000 sq.ft. lodge is open year round and located just a 10-minute walk from the Canada’s second largest hotsprings in Liard River Hot Springs Provincial Park. FNFN is assessing the operation in 2013 to identify opportunities to grow the business.
BLACK DIAMOND DENE LIMITED PARTNERSHIP AND OTHER BUSINESS VENTURES
In 2008, FNFN wanted to further evaluate economic development opportunities and turned to a business consultant with extensive experience with the oil and gas sector, First Nations, impact benefit agreements and business development.
One of the new ventures that was developed in 2009 was a 50/50 equity partnership between FNFN and the Alberta-based Black Diamond Group, a provider of temporary and permanent modular building and energy services products. The joint venture, called Black Diamond Dene Limited Partnership owns modular structures. Using those structures, it builds and rents out accommodation and workspace camps for the oil and gas industry, particularly in the Horn River Basin.
In 2011, the profitable company was recognized with an Outstanding Achievement Award for Joint Venture Business of the Year at the third annual BC Aboriginal Business Awards.
Another partnership that was created through FNFN’s consultant was Waterways Communications Limited Partnership (2010), a joint venture with Northwestel to provide resource companies operating in the Horn River Basin with communications products and services such as voice, Internet and data solutions using satellite and microwave technology.
FNFN is also in the process of establishing its own aggregate business, which would produce gravel from on-reserve sources for the extensive road building taking place to service the oil and gas industry.
AGREEMENTS WITH PROVINCE
While business development and revenue generation is important to FNFN, the Nation has worked hard to ensure that resource development on its traditional territory occurs in a way that protects their land and resources for future generations. To that end, FNFN unveiled its Strategic Land Use Plan and signed key agreements with the Province of BC in 2012.
The Strategic Land Use Plan sets out FNFN’s vision and principles for land use across its territory and outlines the rules and boundaries for future industrial development. It divides FNFN territory into four zones, each with different rules for how development occurs. In the plan, just nine per cent of their territory is off-limits to industry.
In the summer of 2012, FNFN also signed the Fort Nelson First Nation Economic Benefits Agreement with the Province of BC. The agreement provides FNFN with a share of the revenues generated from resource development in their treaty territory. The revenue sharing formula varies depending on the type of industrial activity.
FNFN also signed the Oil and Gas Consultation Agreement with the Province. It lays out a consultation process and timelines for referrals for oil and gas tenures as well as oil and gas development permitting activities between FNFN, the Ministry of Energy and Mines and the Oil and Gas Commission.
A forum called the Horn River Leadership Group Initiative was also created to bring FNFN, the Province and natural gas producers together to co-ordinate the development of natural gas in the Horn River Basin in an environmentally and economically sustainable. It includes $1.5 million in capacity funding for FNFN.
FNFN also received $2 million for a Community Development Planning Fund to support, among other things, a new lands department building and research to monitor the impact of oil and gas activity in FNFN traditional territory.
Across British Columbia, companies connected to the oil and gas sector, as well as the Provincial government and other First Nations, are increasingly turning their attention to opportunities in the emerging liquefied natural gas (LNG) sector. As a First Nation whose economic fortune has been closely tied to the success of oil and gas sector for the past 30 years, FNFN recognizes the potential economic benefits LNG.
Simultaneously, the FNFN have been working hard to strike a balance between developing part of the land to generate economic benefit, while protecting the land for future use. Through wholly-owned operations like Eh-Cho-Dene Enterprises and partnerships like the Eht’oni drilling rig, FNFN has demonstrated that it has the capacity to develop and succeed in a wide range of economic projects, provided they are based on mutual respect and shared economic goals.
Through the Oil and Gas Consultation Agreement and its Strategic Land Use Plan, FNFN has provided greater certainty for resource development on its territory by outlining the foundations of that mutual respect.
As former Chief Kathi Dickie said when FNFN announced its land use plan in 2012, “We are not opposed to development. We want to ensure it is done in appropriate places, and in appropriate ways. Companies that respect our rights will find a supportive partner in Fort Nelson First Nation.”