‘Disappointment, fear and anger:” Indigenous communities blindsided by Teck's decision to pull Frontier project
CALGARY – Ron Quintal was barbecuing with his family on Sunday when he received a text from one of Teck Resources Ltd.’s vice-presidents, requesting an urgent phone call.
“I thought it was an invite to Ottawa,” said Quintal, president of the Fort McKay Metis Nation, noting that he expected good news and to attend a ceremony approving the project this week. “It’s devastating,” he said.
The Fort McKay Metis was one of the 14 Indigenous groups that had signed benefits agreements with Vancouver-based Teck for Frontier, a proposed 260,000 barrels per day oilsands mine that would have required 7,000 people to build it.
Quintal said Teck leadership had been in meetings for four consecutive days and came to the decision Sunday afternoon. The cancellation of the project has come as a “shock” to his community.
Now, Quintal said, his members are asking him, “What the hell is going on?”
On Sunday night, Vancouver-based Teck announced it was withdrawing its application to build the 270,000-barrel-per-day oilsands mine in northern Alberta just days before Ottawa was set to approve the project.
Like other companies that have recently pulled major projects planned to be built in Canada, Teck president and CEO Don Lindsay said in a letter to federal environment minister Jonathan Wilkinson, his company was concerned that Frontier had become a symbol and a victim of a broader debate about resource development and climate change.
“The growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved,” Lindsay wrote. “In that context, it is now evident that there is no constructive path forward for the project.”
The decision left Indigenous communities, competing oil and gas companies and the broader Alberta business community grappling with “disappointment, fear and anger” on Monday morning, as the decision reverberated through the province, Quintal said.
“They’re a Canadian-based company that did everything right. If one of our own can’t get a project built, then who can?” Quintal said, adding that the cancellation should cause deep introspection across the country. “You don’t just look at a $20-billion project walking away without taking it seriously.”
Similarly, Fort McKay First Nation Chief Mel Grandjamb said in a release Monday afternoon he was “disappointed” by Teck’s decision to shelve the project, adding that his nation had been working with the company on the project since 2008.
“Teck’s decision follows in the wake of a national debate about resource development, climate change, environmental protections and Indigenous interests,” Grandjamb said, adding, “Responsible resource development can be a meaningful tool for reconciliation when it also recognizes Canada’s obligation to protect Treaty rights.”
To many in Alberta’s business community, the cancellation of Frontier is a continuation of a larger pattern of major companies withdrawing large projects. In the past five years, TC Energy Corp. has cancelled plans for its $15-billion Energy East pipeline, Petronas Bhd withdrew its $36-billion Pacific NorthWest LNG proposal, CNOOC Ltd. scrapped its $28-billion Aurora LNG project and Exxon Mobil Corp. pulled the application for its $25-billion West Coast Canada LNG project.
“The root of all this is our country is not united behind a vision to develop resources in a responsible way that manages climate change,” Adam Legge, Business Council of Alberta CEO, said on Monday.
The Business Council of Alberta is calling on Ottawa to launch a royal commission to develop a framework and plan for resource development and climate change in Canada in an attempt to address the concerns raised in Lindsay’s letter.
Legge said that if a consensus can be reached on these issues, it’s possible that Teck’s Frontier project could be resurrected. “I just don’t know how we can get to that national consensus,” he said.
In the meantime, he said it’s disappointing that 14 Indigenous communities lost out on potential jobs and benefits agreements with Teck for the project. “These opportunities don’t come around very often in the remote areas of our country,” Legge said.
The shock withdrawal of the Teck’s application will have implications for oil and gas producers outside of the oilsands trying to attract investment, said Grant Fagerheim, president and CEO of Whitecap Resources Inc., which produces light oil in Alberta and Saskatchewan.
Fagerheim said he received two calls from international shareholders on Monday morning — one from the U.S. and one from the U.K. – asking for an explanation of what would have led to this decision.
“The loser at the end of the day is the Canadian public,” Fagereheim said.
The cancellation of Frontier also underscores the political risk investors now face when looking at putting their money into Canadian companies.
“Investors look very carefully at the risks they face,” said Kevin Neveu, CEO of Precision Drilling Corp., noting that most oil and gas investors putting their money in Canada are focused on geological or seasonal risks. “They have a hard time analyzing political risks.”
The cancellation of Frontier – amid a broader debate about major projects, pipelines and rail blockades – is particularly difficult for foreign investors to understand. “It’s really hard for investors to figure out public sentiment if they’re not living inside the country,” Neveu said.
Neveu said his company has worked hard to reduce the environmental impact of its operations, but Canadian resource companies don’t get credit for the work they’ve done.
Indeed, Explorers and Producers Association of Canada president Tristan Goodman said domestic oil and gas companies have worked to reduce their emissions and demonstrate that the Canadian sector can be part of the response to climate change.
“We do have a climate problem that we as a nation have to show leadership on,” said Goodman, whose industry group represents small- to mid-sized oil and gas companies.
At the same time, Goodman said, oil and gas continue to be in demand in both developed and developing countries. While Canadian projects are blocked, competing oil companies in other countries are rushing to meet that demand.
“The cancellation of something like this reverberates so far outside of Canada,” Goodman said. “Investors are increasingly nervous putting their money into this country.”
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