Aug 28, 2013 (ACCESSWIRE via COMTEX) --
When the First Nations Group Limited Partnership (FNLP) signed its
benefits agreement with the B.C. government and backers of the Kitimat
LNG project for a proposed 463-kilometre pipeline earlier this year,
Robert Metcs was in the background, smiling.
Metcs, the President of Havlik Metcs Limited, which represented the 15
First Nations in the FNLP, says the $200 million agreement is a new
benchmark for how business can be done between government, industry and
aboriginal peoples in Canada.
The proposed pipeline will carry liquefied natural gas (LNG) from Summit
Lake north of Prince George to the proposed Kitimat LNG facility, as
well as provide a number of economic opportunities for First Nation
communities along the route.
Metcs said his job was to "go out and get the best deal we could," for
the First Nations with Kitimat LNG project backers Apache Canada and
Chevron Canada.
The Oil & Gas Investments Bulletin (OGIB) spoke with Metcs recently
about negotiating with First Nations communities, and what investors
should know about why some deals work out, while others don't.
OGIB: How does the process start when a company comes to a First Nation
community? What's the right and wrong way to start a negotiation?
Robert Metcs: Traditionally, proponents would develop a project to a
certain point and their lawyers would advise that there is a duty to
consult with First Nations. That can work two ways. Most of the time
what you are going to get on the other side of the table is a process
that might lead to an impact benefit agreement, where there are some
benefits through contracting opportunities, jobs and/or some form of
payment over time. There is no real partnership. Or, you could have
outright opposition and a pathway to litigation. That is where Northern
Gateway looks to be now. It has become a symbol of how not to do
consultation. I think that there is a widespread view out there that the
traditional way of doing things is not serving anybody's interests.
OGIB: What are some good examples of negotiations with First Nations?
Metcs: A good example is the Haisla First Nation with their BC LNG
project with Houston-based LNG Partners LLC. That company went to talk
to the Haisla before they even started planning the project for a
floating LNG facility, asking if they wanted to be partners. We are
trying to do something similar with the LNG-related pipeline proposals,
which is to go to the proponents and say that there is the opportunity
for first Nations to be partners, that there is value to be created and
that this is economically advantageous to you as a proponent and as a
business person to have the First Nation on board. Let's sit down and
figure out what this value is and how to make this work. There is a
commercial benefit to getting First Nations on board as partners, and we
are going to continue to try to explore that angle. What we have seen
with LNG and natural gas is that many First Nations are willing to sit
down and have this discussion within the context of a cost-benefit
analysis. That does not appear to be the case with any of the oil
pipelines.
OGIB: Why are the First Nations in your group in favour of natural gas pipelines, but not oil?
Metcs: I don't think that's an irrational position. One of the reasons
we could do this deal was because the FNLP First Nations came to view
natural gas as different from oil. The fear at first was that if they
said yes to natural gas pipelines, they would have to say yes to oil
pipelines. There was a diametrically opposed view with respect to
natural gas and oil within FNLP. There are differences in terms of what
happens if a pipeline leaks or bursts. Oil is a different animal,
particularly along the BC coast and in the Interior. The cost benefit
analysis appears to be in favour of natural gas and goes the other way
in terms of oil. It's not the pipeline; it's what's in the pipe. What
goes in them is a consideration.
OGIB: What are some of the misconceptions you think investors have about companies working with First Nations?
Metcs: That they are always opposed to everything. That you can't do
business with them. That they don't live up to agreements. This is
partly the media's fault. FNLP was a pretty unique deal. 15 First
Nations said yes to a massive pipeline project, but the only question I
seem to get is "What about oil?" You can talk about oil, but FNLP is an
example of something that most people thought was impossible. Why it
happened and whether it can be replicated are legitimate questions that
should be asked.
OGIB: Help investors understand the cost-benefit analysis and why it worked out for the FNLP?
Metcs: The potential impacts of a project on rights and title and the
environment are always going to be front and centre. You should be
minimizing the impacts, which means doing things like rerouting from
areas that are sensitive and respecting the legitimate concerns that
First Nations will have. At the same time you should be trying to
maximize things on a commercial basis. It's not about proponents taking
money out of their pockets and saying 'How much of the pie are we going
to give you?' One thing we learned from the FNLP deal was that you can
create value by having First Nations as partners as this can reduce
project risk, accelerate timelines, all of the things you can put a
number on. That's real economic value that can be shared, so there's an
upside for everybody to do this. You also have to remember that each
First Nation is its own government with its own constituents. There's
politics involved. The communities eventually need to make a decision,
weigh the potential benefits against the potential impacts. The more
attractive you can make that decision, the better. With FNLP, we got 15
Nations across the finish line. You aren't going to get a positive
decision every time, but that's not irrational either.
OGIB: Is the FNLP agreement solid? Do investors have anything to worry
about in terms of it falling apart down the road given this is all still
a proposal?
Metcs: The only thing I can say is that, as in any agreement, we tried
to align the interests of the parties going forward. With any agreement
you can have circumstances change. There may be issues going forward,
but I don't think there is any more danger of this agreement falling
apart than there would be with any other agreement.
OGIB: What's next in terms of negotiations with First Nations and companies looking at natural gas and LNG projects in BC?
Post to be found at:
http://www.marketwatch.com/story/what-investors-should-know-about-todays-new-lng-deals-2013-08-28?reflink=MW_news_stmp
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