8 minute read
FORGING THE FUTURE
INDUSTRY BRIEF
FORGING THE FUTURE
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BY SHARON CROWTHER
Indigenous businesses are thriving in the Athabasca oil sands and securing long-term prosperity for their communities. For Mikisew Cree First Nation, this means self-determination and the fulfillment of its slogan, ‘Pride of a Nation’. “I have worked in the oil sands for 35 years and, in that time, I have seen a huge shift in the role Indigenous business are playing in the industry,” says Mikisew Cree Chief Peter Powder. “Our businesses have grown from fulfilling janitorial roles to providing specialist engineering services, construction, mining, consulting, and more. And we’re very good at it,” he adds. “Where once Indigenous businesses were engaged to meet industry expectations, now their services are procured because they are indispensable, they are the best.” In fact, the value of procurement from Indigenous business in Northern Alberta’s oil sands is at an all-time high. In 2020, the combined Indigenous business spend of Suncor, Syncrude, Imperial Oil, Cenovus Energy and CNRL alone exceeded $2.5 billion. That’s a significant increase on the total industry spend reported for previous years, which, according to the Canadian Association of Petroleum Producers (CAPP), was $2.36 billion in 2019, $2.20 billion in 2018 and $1.54 billion in 2017. Procurement contracts encompass a range of services from maintenance to logistics and construction, all of which are provided by Mikisew Group, the business entity of the Mikisew Cree First Nation. The Group was founded in 1991 using a $26.2 million land claim settlement from the Government of Canada and in response to the decline of Mikisew’s traditional economy of commercial fishery and fur trade. Their founding mission statement included a plan to be self-sufficient through the development of revenue, skills and business by the year 2000. Today, they have a peak workforce of 750 staff employed through wholly owned businesses, a third of whom are Indigenous, working across more than 40 active long-term contracts through 12 different operating entities.
Chief Peter Powder, Mikisew Cree First Nation
In 2021, Mikisew Group was recognized as one of Canada’s Best Managed Companies and awarded the Aboriginal Economic Development Corporation Award from the Canadian Council for Aboriginal Business. The Group also surpassed $20 million in annual net economic benefit to Mikisew Cree First Nation through payroll, dividends and donations. These dollars directly impact the lives of Mikisew Cree members through education and training, healthcare and community services including youth programming and childcare.
“When the Group started it was with the intention of creating jobs to offset those that were lost due to impacts on the Nation’s traditional ways of earning a living,” explains Dan Gallagher, Mikisew Group’s interim CEO. “And then, over time, our mandate shifted. As we expanded, we were able to offer roles in the heavy trades used on the oil sands sites as well as back-office functions such as HR, payroll and finance. Now we create careers for our members, not just jobs.”
“We have also grown by way of partnerships,” he continues. “At first it was just about our own businesses but now we look to partner with bestin-class operators that provide strategic services to our clients. These shifts have allowed us to provide reliable distributions leading to greater economic stability in the community.”
Chief Peter Powder agrees. “We strive for self-sufficiency, and we understand that creating not just employment opportunities but also generating our own sources of revenue is paramount to seeing that goal become a reality,” he says. “As Canada’s first entrepreneurs, business is in our blood.” According to Ottawa-based think tank, the Macdonald-Laurier Institute (MLI), Indigenous communities involved in the resource sector have been gaining significantly more influence over the past 20 years, driving a shift towards project ownership. “The trend in recent years has evolved towards Nations asserting themselves as partners, owners and shareholders in resource development,” wrote MLI fellow Heather Exner-Pirot in a May 2021 report. “This is often the most consequential way through which they can achieve economic self-determination and real leverage in how projects proceed,” Exner-Pirot continues.
Gallagher agrees that the shift in focus from procurement to partnership has been a positive one for First Nations communities. “Just like any other government, the Mikisew Cree First Nation has a budget and is always looking to improve the lives of its members by delivering services in the community,” he explains. “Through focusing on equity stakes in organizations, in addition to our wholly owned operations and various partnerships, we have been able to diversify and de-risk our business such that fluctuations in commodity markets are less impactful to our shareholder, the First Nation.”
Gallagher believes the epitome of this model is the 2017 East Tank Farm annual net economic benefit deal, whereby Mikisew Cree First Nation and Fort McKay First Nation to Mikisew Cree First Nation made history when they acquired through payroll, dividends a 49 per cent share of Suncor’s East Tank Farm Development, a bitumen and diluent facility north of Fort McKay.
At the time, the $503 million deal was the largest business investment to date by a First Nation entity in Canada and provided an important economic model for Indigenous communities across the country.
Revenue generated by the facility has already paid for essential housing, to alleviate a long-term housing crisis within the community, and will be a major contributor to the Nation’s operating budget for generations to come.
“The East Tank Farm deal came about after years of dialogue and collaboration between Suncor and the Nation’s Government and Industry Relations teams, who were looking to take our community benefit agreement to a new level,” recalls Gallagher. “The cornerstone of the deal was a true understanding by Suncor that an equity stake in the tank farm would deliver benefits far beyond what traditional contracting opportunities had been providing,” he says. “They pioneered a shift in the marketplace and demonstrated that there is a better way to deliver on community agreements by partnering with the Nation to ensure longterm economic benefits. This breakthrough partnership has shifted the way our clients think about how they can engage at a deeper level with the Economic Development companies from each of the various Nations in the region.”
Nations asserting themselves as partners, owners and shareholders in resource development ... This is often the most consequential way through which they can achieve economic self-determination and real leverage in how projects proceed ...”
“The East Tank Farm partnership signalled a shift in how Suncor and Indigenous communities can work together. It demonstrated our commitment to a new type of engagement—one focused on reconciliation as part of our long-term sustainability goal and one that allows direct participation for Indigenous communities in energy development,” adds Curtis Serra, Suncor’s General Manager Commercial. “The agreement will provide a steady stream of revenue to both Mikisew Cree First Nation and Fort McKay First Nation for at least 25 years.”
But the major legacy of the East Tank Farm Development lies in the discussions it ignited among First Nations leaders across Canada and the deals which have been inked since, including a $1.5 billion deal between Suncor and eight Indigenous communities to purchase part of the Northern Courier Pipeline and a partnership agreement for the Cedar LNG project, the first majority Indigenous-owned LNG export facility in Canada.
“Demonstrating successful business partnerships to other First Nations, and learning from their successes, has created a period of rapid growth for Indigenous businesses in the oil sands sector,” reflects Chief Peter Powder. “We know that successful Indigenous businesses inspire other Indigenous business owners and entrepreneurs,” he says. “They also hire more Indigenous people who then gain the experience to fill more senior management roles within the sector, and so on. The rate of growth and expansion of Indigenous businesses in the oil sands should be expected to accelerate rapidly in the coming years, which is an exciting prospect for the First Nations communities which will benefit.”
Mike Heck (Suncor), Chief Peter Powder (MCFN), Dan Gallagher (Mikisew Group, CEO) (left to right). “Thebacha” refers to partnership of Suncor and the Mikisew Cree First Nation. In 2017, the Mikisew Cree and Fort McKay First Nations joined forces to buy 49% of Suncor’s East Tank Farm development, resulting in the largest and most significant business transaction in Aboriginal history to that date.
Sharon Crowther
Sharon Crowther is an Alberta-based freelance writer whose work is regularly published in the Globe and Mail, Calgary Herald, BBC Online and publications around the world. She writes on a wide range of topics from business and technology to real estate, sport, travel and the arts. She enjoys discovering new narratives in old stories and was excited to learn that Indigenous leaders and Northern Alberta’s oil sands industry are finding new ways to partner and build long-term wealth for Indigenous communities.
