EAST TANK FARM EQUITY ARRANGEMENT

In the fall of 2017 Suncor, Fort McKay First Nation (FMFN) and Mikisew Cree First Nation (MCFN) announced the completion of the acquisition by FMFN and MCFN of a 49 per cent interest in the East Tank Farm Development (ETFD) valued at approximately $500 million. The two First Nations independently financed the acquisition, with the offering structured and marketed by RBC Capital Markets.

The agreement is unprecedented in size and scale for the First Nations and Suncor and is part of a growing trend of Indigenous communities as equity owners. The investment will provide a steady stream of revenue to both FMFN and MCFN for a minimum period of 25 years. Located 35 kilometres north of Fort McMurray, the ETFD provides storage, cooling and blending services for bitumen received from Fort Hills.

At a signing ceremony on Nov. 22, 2017, Suncor, Fort McKay First Nation (FMFN) and Mikisew Cree First Nation (MCFN) announced the completion of the acquisition by FMFN and MCFN of a 49 per cent interest in Suncor’s East Tank Farm Development (ETFD).

The two First Nations independently financed the acquisition, with the offering structured and marketed by RBC Capital Markets. The agreement is unprecedented in size and scale for the First Nations and Suncor and is part of a growing trend of Indigenous communities as equity owners.

“We’ve completed a historic deal for energy development in Canada. This unique partnership has been part of a journey that demonstrates how innovative thinking and collaborative spirit can result in a mutually- beneficial opportunity and it has changed the way Suncor thinks about how our Aboriginal neighbours may participate in energy development,” said Mark Little, president, Upstream, at the time of the signing and now Suncor’s president and CEO. “Through this partnership we’ve learned a lot about working together to create something significant, and I look forward to continuing to work together on this joint investment with Fort McKay First Nation and Mikisew Cree First Nation for many years to come.”

The agreement is held in a limited partnership with Suncor called Thebacha, the Dene word for “river.” The investment will provide a steady stream of revenue to both FMFN and MCFN for a minimum period of 25 years.

“The economic benefits generated from this deal will help our Nation to build capacity within our businesses, develop infrastructure in our community, fund social economic programs, and provide us with the means to help pay for education and training for our youth, and will be felt in our community for generations to come,” says MCFN Chief Archie Waquan.

Located 35 kilometres north of Fort McMurray, the ETFD is part of the existing East Tank Farm and adjoins the Hot Bitumen Terminal (HBT) and its associated tanks. Once Fort Hills begins to produce bitumen, the ETFD will receive the Fort Hills hot bitumen via the Northern Courier Pipeline.

“The deal represents one of the largest business investment to date by First Nation entities in Canada, and not only demonstrates the great potential for partnerships between First Nations and industry but serves as a model for how First Nations can achieve greater self-determination    through financial independence,” said, FMFN Chief Jim Boucher, Chief at the time of the signing. “It is an example of how First Nations and natural resource development companies can find ways to support each other for the mutual long-term benefits.”

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Click to read a foreward from JP Gladu, Chief Development and Relations Officer, Steel River Group; Former President and CEO, Canadian Council for Aboriginal Business.

CALGARY — Alberta’s UCP government says it will end oil curtailment quotas in December, nearly two years after the previous  NDP government introduced them to support oil prices.

The province says it will extend its regulatory authority to continue the program for another year but doesn’t plan to use it after the end of November.

It says the monthly curtailments are no longer necessary because 16 per cent of Alberta’s crude oil production is offline, down from 22 per cent at the start of the COVID-19 pandemic.

The program has been controversial from the start, with oil producers such as Cenovus Energy Inc. largely in favour of it while oil producers who also own refining operations, such as Imperial Oil Ltd., have been adamantly opposed.

The allowable production quota was gradually raised from 3.56 million barrels per day in January 2019 to 3.81 million bpd by year-end, a level maintained through the first 11 months of 2020.

The province says production was actually 3.1 million bpd in August and it’s not expected to exceed export capacity before mid-2021.

The government says it extended what was intended to be a short-term measure because of ongoing delays to pipeline projects that would increase the province’s export capacity.

“Maintaining the stability and predictability of Alberta’s resource sector is vital for investor confidence as we navigate the economic conditions brought on by the pandemic, the commodity price crisis and the need for pipelines,” said Energy Minister Sonya Savage.

“This purposeful approach serves as an insurance policy, as it will allow Alberta to respond swiftly if there is a risk of storage reaching maximum capacity while enabling industry to produce as the free market intended.”

The province quoted Genscape in noting that there were about 20 million barrels in storage as of Oct. 16, down from nearly 40 million when the curtailment program began.

This report by The Canadian Press was first published Oct. 22, 2020.

Companies in this story: (TSX:CVE, TSX:IMO)

The Canadian Press