Elements Magazine - Spring 2019

GLOBAL PETROLEUM SHOW

INDIVIDUAL SPOTLIGHT

IOGC 2017/2018 UPDATE

COURTNALL APSASSIN

EXECUTIVE SUMMARY REPORT

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2018 HIGHLIGHTS PAGE 10

CANADA’S FIRST NATIONS ENERGY PUBLICATION

SPRING - 2019

INDIGENOUS ENERGY SUMMIT HIGHLIGHTS CONFERENCE SUMMARY

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CONTENTS A MESSAGE FROM IRC PRESIDENT/CEO STEPHEN BUFFALO A MESSAGE FROM NEBCE WELCOME TO 2019 UPDATE FROM JTC1 ON REGULATIONS AND 2019/2020 ACTIVITIES INDIGENOUS ENERGY SUMMIT HIGHLIGHTS CONFERENCE SUMMARY 2ND ANNUAL EDUCATION FUNDRAISER REDWOOD MEADOWS GLOBAL PETROLEUM SHOW 2018 HIGHLIGHTS AND 2019 INFORMATION IRC PRESS RELEASE ON BILL C-48 AND C69 TOP NOTCH OILFIELD CONTRACTING SERVICES SUCCESS STORY INDIVIDUAL SPOTLIGHT COURTNALL APSASSIN IOGC 2017/2018 UPDATE EXECUTIVE SUMMARY REPORT CANADIAN ENERGY RESEARCH INSTITUTE EXCERPT FROM CERI REPORT ENGAGEMENT WITH INDIGENOUS COMMUNITIES CAPP REPORT CORPORATE MEMBERSHIP PROGRAM INFORMATION

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CANADA’S FIRST NATIONS ENERGY PUBLICATION

Spring - 2019 STEVE SADDLEBACK DIRECTOR & EDITOR IN CHIEF NATIONAL ENERGY BUSINESS CENTRE OF EXCELLENCE INDIAN RESOURCE COUNCIL V STRATEGIES INC. CONCEPT, DESIGN AND LAYOUT INDIAN RESOURCE COUNCIL OF CANADA 235, 9911 CHIILA BOULEVARD TSUUT’INA NATION, ALBERTA T2W 6H6 T: 403.281.8308 F: 403.281.8351

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W: www.irccanada.com www.elementsmagazine.ca COVER PHOTO ASSEMBLY OF FIRST NATIONS ALBERTA REGIONAL CHIEF MARLENE POITRAS, FORMER INDIGENOUS RELATIONS MINISTER GOVERNMENT OF ALBERTA RICHARD FEEHAN, AND CHIEF BERNICE MARTIAL COLD LAKE FIRST NATIONS AT THE INDIGENOUS ENERGY SUMMIT IN TSUUT’INA NATION, AB JAN 2019

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Elements© is a quarterly publication distributed by the National Energy Business centre of Excellence (NEBCE) and IRC inc. Any use of content or duplication without written consent is not permitted

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A MESSAGE FROM STEPHEN BUFFALO, PRESIDENT/CEO IRC Tansi and greetings again to all our First Nations leaders, industry supporters of IRC and friends. We are happy to bring you another edition of Elements that showcases our activities relating to training and capacity development, providing oil and gas expertise to First Nations and effective liasoning with industry and governments that ensures a good working relationship that benefits all parties equally. As a membership and advocacy association of more than 130 First Nations across the country, we proactively support any and all initiatives in the energy sector - upstream, downstream midstream and alternative energy - that bring value to our members.

The IRC has been vocal and spoken out strongly against Government policies and legislation including Bills C-48 (the Tanker ban legislation) and C-69 (Impact Assessment Act) which, in our view, harm our energy industry by placing unnecessary barriers and bottlenecks to the transportation and marketing or our oil and natural gas resources. Many of our First Nations oil and gas producers are dependent on this resource to provide additional sources of much needed revenues and so when the Canadian energy industry hurts from these regressive policies, the ripples are felt even more so in our communities. We have made presentations to the House of Commons and Senate committees on these matters several times. I am glad that the Senate Committees have listened to these concerns and hopefully the Government of Canada will also listen to us when they make their final decision.

We recently hosted an Indigenous Energy Summit (IEC) which is featured elsewhere in this magazine. The purpose of the Summit was to bring Indigenous, industry and Government leaders together to discuss issues related to pipeline projects including TMX and how Indigenous ownership could be realized. We had a sold out crowd of over 300 attendees including Indigenous proponents of pipeline equity ownership and industry leaders from major companies including Kinder Morgan, CNRL, Suncor and others who unanimously endorsed the idea of Indigenous ownership of TMX. As an advocacy organization, the IRC was pleased with this endorsement and will continue to support indigenous proponents and proposals that benefit Indigenous people across the country. To this end, we are excited about Premier Jason Kenney’s proposed Indigenous Equity/Crown Corporations Fund which we believe will be an important catalyst to help Indigenous proponents realize their dreams of pipeline ownership. The IRC will convene a follow up summit with key leaders shortly to help advance these ideas and proposals further.

There is an important window of opportunity that is available to us and we must seize this moment now or watch it dissipate as has happened in the past. The energy industry is critical to Canada’s growth and FNs want to be part of this growth. The IRC will continue to be a competent and reliable advocate of First Nations in the broader energy sector and we count on you for your on-going support. Thank you

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Stephen Buffalo, B. Mgmt.

President/CEO, IRC

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Welcome to the Spring 2019 Issue of Elements Magazine. It’s been a great few months since our last publication. In that time, we have signed an MOU with SAIT promoting education activities for IRC Members, held our Petroleum Industry Overview/Pipeline 101 courses in Edmonton and Calgary, we have been to Ottawa to talk with the Federal government and Senate representatives on potential impacts to First Nations on proposed legislation alongside the Executive from the IRC. In addition, we held the Indigenous Energy Summit in January that brought together First Nations, Government and Industry representatives to talk about Indigenous equity ownership in energy projects. This evolving discussion on ownership has the ability to unlock potential for Indigenous communities and the IRC membership. We here at the Business Centre look forward to the business opportunities, training, and capacity building that come along with these actions. We wish you a successful year ahead and welcome you all to join us as we host the Indigenous Energy Pavilion at the 51st Annual Global Petroleum Show in Calgary, Alberta this June.

Hai Hai

Steve Saddleback Director, National Energy Business Centre of Excellence (NEBCE)

UPDATE FROM JTC1 ON REGULATIONS AND 2019/2020 ACTIVITIES

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Indian Oil and Gas Canada (IOGC), a special operating agency of CrownIndigenous Relations and Northern Affairs Canada (CIRNAC), has the authority to manage oil and gas development on First Nation Reserve Lands that have. This Act and its regulations only apply to Reserve lands that have been previously designated by individual First Nations and does not apply to traditional territory or off Reserve lands. The Indian Oil and Gas Regulations form the rules that Industry must follow when developing those resources. The existing regulations were first enacted in 1974 with minor changes in 1995. This is one of the major reasons for amending the oil and gas regulatory regime. Other regimes, for example the provinces, update their rule sets on a regular basis to ensure that they are current and remain relevant to the constant changes in oil and gas development technology.

First Nations have been involved throughout this process of amending both the Act and the Regulations.

Our involvement has been achieved through a Joint Technical Committee (JTC1), which consists of technical members from the major producing First Nations, members of the Indian Resource Council (IRC), IOGC and CIRNAC. The JTC1 has been provided

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resources to secure outside technical expertise and legal counsel to assist throughout this process. Our involvement is governed by an agreed to terms of reference (TOR). The TOR require IOGC to provide the JTC1 with drafting instructions (DI) for our review and in turn the JTC1 would review and request changes to the DI, based upon our experiences and expertise with on Reserve oil and gas development.

IOGC then would either make those changes or provide the JTC1 a written response as to why they didn’t make those changes. The DI would then be used by the Federal Legislative drafters to develop the actual regulations. The draft regulations followed the same process. After approximately 5 drafts of the regulations, the JTC1 was in the position to support the amended regulations to begin the Federal Legislative process to become law.

The regulations were split into 10 modules and will be amended on a phased approach. The first phase contains 3 modules, First Nation Audit, Drainage and Sub-surface, which is scheduled to be passed by Canada in June of 2019 and tentatively come into force on August 1, 2019. Phase 2 contains Surface, Exploration, Environment, Royalties, Money Management, Conservation and

Enforcement. Phase 3 will contain any remaining areas within the regulations that fall outside of the first two phases.

The Indian Oil and Gas Act has already been amended in 2009 and will not come in force until the Phase 1 regulations are amended and passed by the Federal Government.

A training package was designed to assist individual First Nations with the implementation of these amended regulations with an emphasis on areas that First Nations should consider changing their existing procedures at the First Nation level to complement the new regs. Although, the regulations are intended to improve the way IOGC manages First Nation oil and gas development it is important that First Nations are aware of all the changes contained in Phase 1. As these changes or amendments may have an effect on how First Nation’s structure their other agreements, for example joint ventures or participation agreements. The increased protection of First Nation land and environment will in turn increase the liability for Band owned companies, thus First Nations will need to be cognizant of this before securing these types on agreements. The JTC1 is available to provide this training upon request from individual First Nations.

INDIGENOUS ENERGY

SUMMIT HIGHLIGHTS The Indian Resource Council held the Indigenous Energy Summit (IES) in Calgary, Alberta January 22-23, 2019. The IES saw over 400 attendees from across Canada gather to discuss Energy equity ownership opportunities. Over the 2 day conference delegates heard presentations from The First Nations Major Projects Coalition, Project Reconciliation, Crosbie and Company, Criterium Group.

Panel discussions from Industry included speakers such as Trans Mountain President and CEO Ian Anderson, Tamarack Valley President Brian Schmidt, Modern Miracle Network President Michael Binnion, and Canadian Energy Pipeline Association President and CEO Chris Bloomer.

Other speakers included IRC Board Member Chief Roy Fox alongside Christopher Slubicki of Modern Resources Inc..

Keynote speakers included Dr. Vivian Krause, IRC Chairman Wallace Fox, Alberta Energy Minister Margaret McCuaigBoyd, Minister of Indigenous Relations Richard Feehan, and AFN Regional Chief Marlene Poitras.

Day two consisted of the IRC Annual General Meeting followed by presentations from Canapux, a consortium of Wapahki Energy/Heart Lake First Nation/CN Rail and Sproule.

The conference wrapped up with a presentation from Roger Fragua of Cota Holdings LLC/NDN Energy LLC speaking on the opportunities and desire for International collaboration between First Nations in Canada and the Tribes of the United States.

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2ND ANNUAL EDUCATION FUNDRAISER GOLF TOURNAMENT

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The Indian Resource Council held the 2nd Annual Education Fundraiser Golf Tournament at the Redwood Meadows Golf Course on Tsuut’ina Nation in September 13, 2018. Players from across the country gathered for fun tournament and a chance to win $10,000 all while raising funds for education.

The tournament featured a guest appearance from Tsuut’ina’s own Canadian Women’s Long Drive Champion Irene Crowchild who was raising funds for students to further their education. The Indian resource council would like to thank all those who participated. A huge thank you to the sponsors of the 2nd Annual Education Fundraiser tournament including MNP LLP, TransCanada, Graham Construction, Tarpon Energy, Eagle Travel, Encana, Peace Hills Insurance, Peace Hills Trust, Eagle Law, SAIT, CanadaAction, Canadian Energy Pipeline Association, and everyone who braved the cool conditions to participate.

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PIO/PIPE101

SAIT IRC MOU

The Indian Resource Council held its Petroleum industry Overview and Pipeline 101 programs in March 2019 at the SAIT Campus in Calgary, Alberta. The course had student representatives from Treaty 6 & 7. The courses featured guest presentations from the National Energy Board, Indian Resource Council, Indian Oil and Gas Canada. In addition, participants toured the facilities of SAIT campus including a Gas Facility, Drilling Rig, Service Rig, Drill Bit storage facility, and more.

The Indian Resource Council is proud to announce the re-signing of the memorandum of understanding with SAIT. The MOU reaffirms the commitment both the Indian Resource Council of Canada and SAIT have to furthering the education of First Nations in areas related to energy development.

IRC hosted participants from Treaty 6 in Edmonton at the Yellowhead Tribal College for PIO/PIPE101 in May 2019.

Guest presentations were made by Indian Oil and Gas Canada and the IRC Joint Technical Committee Program Manager David Shade on the upcoming changes to the Indian Oil and Gas Act phase 1 regulations. Students participated in field visits to Michels Canada Nisku facility as well as Precision Drilling. Contact the NEBCE office for the next round of courses. NEBCE will host courses in British Columbia and Saskatchewan in summer, 2019.

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GLOBAL PETROLEUM SHOW 2018

HIGHLIGHTS & UPCOMING 2019 INFORMATION IRC hosted the Indigenous Energy Pavilion at the 50th Anniversary of the Global Petroleum Show. The pavilion featured over 40 First Nation businesses with attendees including ACDEN, Fort McKay Group of Companies, Sadlbak Trucking, BPE Earthworks/Manzini Engineering, Heart Lake Group of Companies, First Nations Major Projects Coalition, Indian Oil and Gas Canada, Saskatchewan First Nations Natural Resources Centre of Excellence, Nistes Integrity, Indian Resource Council, Ermineskin Resource Development, and 2018 Global Petroleum Show Indigenous Award winning company Pimee Well Servicing. The pavilion featured exhibition pow wow dancers from the Stampede Grandstand show.

We invite all to attend the 2019 Indigenous Energy Pavilion. We will feature culture learning moments mixed with business features of each of the pavilion companies.

Companies for 2019 include Ermineskin Resource Development, Heart Lake Group of Companies, DJean Enterprises, Top Notch Oilfield Services, Genmec ACL, Total Containment Services, Circle for Aboriginal Relations Society, First Nations Major Projects Coalition, Spirit Staffing and more.

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Indian Resource Council is proud to be nominated for the 2019 Indigenous Excellence Award for the Global Petroleum Show. Congratulations to all nominees.

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MARKET IMPACTS TO WATCH The Indian Resource Council to pursue engagement with the Government of Canada on ownership of TMX and concerns with Bill C-69 and Bill C-48 Calgary, Alberta (January 18, 2019) – The Indian Resource Council (IRC) completed their successful “Indigenous Energy Summit” and AGM held January 16 and 17th at the Grey Eagle Casino and Resort, Tsuu T’ina First Nation, Treaty 7 Territory.

The summit included three items of particular concern identified for the IRC to address: • Bill C-69 – “An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection act and to make consequential amendments to other Acts” • Bill C-48 – “An Act respecting the regulation of vessels that transport crude oil or persistent oil to or from ports or marine installations located along British Columbia’s north coast” • Ownership opportunities for First Nations for the Trans Mountain Expansion Project - commonly known as TMX We have been directed by our Communities to engage the Federal Government on the following issues: ◦◦ That the Senate Committees reviewing both Bill C-69 and Bill C-48 are urged to meet with the IRC in some of our Communities ◦◦ Consultation with First Nations on both Bill C-69 and Bill C-48 must be completed prior to any legislative enactment ◦◦ There are a number of Indigenous groups that are actively pursuing participation in TMX, and other similar infrastructure projects, and that their opportunities should not be hindered by the above proposed legislation ◦◦ To ask the Federal government to engage on ownership for First Nations “The 130 Nations of the IRC have been unequivocal in their condemnation of both Bill C-69 and Bill C-48 in their current forms. It is our assertion that Governments are required to consult with the First Nations of Canada prior to the enactment of legislation that will affect us. Bill C-69 and Bill C-48 limit our opportunity to better the economic opportunities for our Nations, and to help our people break the cycle of poverty that currently exists. We are fighting for economic independence and this legislation will certainly impede this” said IRC President and CEO Stephen Buffalo of the Samson Cree Nation This media release is in alignment with our media release of October 3, 2018 in which the IRC urged Senators to oppose Bill C-69, and for the Government of Canada to withdraw Bill C-69

The Indian Resource Council (IRC), advocates on behalf of over 130 First Nations across Canada that have oil and gas rights and interests on their reserve lands as well as on traditional lands.

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ELEMENTS

TOP NOTCH OILFIELD CONTRACTING SERVICES Top Notch Oilfield Contracting (TNOC) from Fort St. John is one of those quiet little success stories, similar to that classmate from school who had their head down working away and knocking every challenge out of the park consistently along the way. Judy and Boomer Desjarlais started TNOC over 15 years ago on a dream and with a small budget. Judy shared that “It started with a request for workers to help some brush cutting, we started with some small savings in our account, we saw an opportunity and went for it”. A great decision that has led to impressive growth over the next decade. Located in the heart of the Montney in Fort St. John, B.C.; Judy and Boomer have completed contracts for a number of large Oil and Gas companies developing Lease pads, providing building and road maintenance, and more. Judy states “We’re proud of our work, we work hard and train our employees to

help them advance in their careers”, this couldn’t be truer as you will find a spotlight on one of TNOC’s employees Courtnal Apsassin in this issue of Elements. TNOC has played a great part of this young man’s career development. Judy says “It’s been a journey, there has been some bumps in the road and challenges along the way but we’re proud to have persevered, all while providing opportunities for those who are looking to be a part of that growth”. When asked what she sees for the future Judy states “We’re excited about the potential projects that are on the horizon.

These construction projects provide opportunities for local contractors, put dollars back into communities and help companies like us continue to grow”.

To find out more about Top Notch Oilfield Contracting Services Inc and their contact information visit them on the web at www.tnoc.ca

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Individual Spotlight

COURTNALL APSASSIN

It’s -22 degrees at mile 135 on the Alaska Highway. The cold has long ago chased bears into hibernation and brought with it blankets of snow. As the sun breaks over Pink Mountain, a snow hare huddles against a backdrop of pines covered in snow and branches crystalized with frost. Its fur blends in perfectly with the cotton snow falling slowly. A hundred years since the arrival of industry, this scenic winter wonderland has changed very little since the days of the Wild West we read about in storybooks.

At the bottom of the hill, a tall frozen plume of exhaust announces the arrival of Courtnall Apsassin, a contractor at Top Notch Oilfield long before the beast he rides comes into view. He doesn’t arrive on horseback as his ancestors before although in this mountain setting, somehow his entrance is just as grand. He’s at the controls of a Caterpillar 14M Grader, elite in its class and the envy of every operator who’s ever run one.

I stopped to talk to Courtnall, but the client has him on a tight schedule so we agree to meet in the construction camp he’s staying at to talk after work. As he drives away, I watch the almost perfect snow-bank curling out from the large wing mounted on the side. Diamond-tipped Sandvic cutting edges bite into the icy road-top, winging the spoils to the side. He works quickly, no lost movements. He leaves a road safe to drive on. I have to admit it looks good.

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For a few minutes after the sound of the diesel engine has faded, I sit there on the side of the road. The snow hare twitches a black nose, and I finally see him against the pine he’s sitting beneath. Somewhere up ahead, a squirrel scolds, and I decide to soak in nature as perfect as it ever was a million years ago.

After a few minutes, a service truck passes, tires crunching on the snow-packed road. Then a logging truck. Just as I’m about to leave, a wide load enters the valley on a truck built for off-road moves. An amber strobe light flashes from the front pilot truck as I hear the driver call ahead on the radio PAGE 14

to Courtnall, asking him if it was clear to start up the hill. In these icy conditions, every move has to be calculated.

As the procession crests the hill, I have to admit I’m proud of this kid. His work keeps these rigs going. His workmanship keeps industry rolling out here on the back hills. I know parts of his story, but not everything, so I’m here to find out.

He’s not quick to open up about his life. His past, his childhood- all off bounds to someone who doesn’t take the time to know him. He’s proud of his Blueberry River heritage.

But his past is riddled with turmoil and unrest. He bounced around from reserve to reserve, back and forth between parent’s housing arrangements. Some would say the odds were stacked against him. When asked about where his friends are now, the ones he knew growing up, he tries to put the best spin on things but soon I realize that many of his closest buddies struggle with alcohol and substance addiction. Abuse of many kinds- he knows what it’s about.

He talks very quietly about suicide, and the affects that unforgiving animal has had on his personal life. The details are painful, and he shies away from telling me too much.

So, I don’t pry.

But when the conversation turns to running equipment, his entire demeanour changes. His smile is quick and confident and he picks up a grease gun and starts to service the many joints on his machine, a rag tossed over his shoulder. His body language says a million words. This is a topic he’ll talk about all day. As an operator myself, I wondered how he got his start. How it came to be that not only is he running equipment out here, he’s running the Cadillac of graders.

Typically, the man running this beast is in his late 40s, grizzled, a life of experience awarding him this seat. I’m generalizingbut I’ve hired thousands of operators. I know.

But, it turns out his story is not what I was expecting.

“I started out labouring for a lot of years, and just kept

showing up and being where I was supposed to be. Then one day someone tried me out on a dozer when the operator didn’t show up. I knew this is what I wanted to do with my life- run equipment. Then, PETRONAS Canada gave me a chance to live my dream through a new training program they came out with in 2017.”

I decided I wanted to know more about this training program, so I keep talking. “You make any mistakes since you started?”

“Oh man, I made a lot of mistakes.” He looks sheepishly at the door as though someone might overhear him. Then he shrugs again.

“I’ve learned every way to break a door window. I’ve learned how NOT to let my cutting edges wear out before ordering new ones. I’ve learned what speed to NOT try to grade uphill, I’ve learned how not to….” He keeps talking but I’m lost in thought already, carried back to my early years running equipment. I remember all of this.

He gives a lot of credit to Cory, his immediate PETRONAS Canada supervisor. Cory is a direct “call it like he sees it kind of guy. A former boxer who doesn’t see the need for candycoating the truth, he’s not afraid to show Courtnall where he went wrong, or how he’s wearing his edges out too quickly.

He doesn’t hold back when showing him how to set his wing so the shoulder is cut safely, perfectly. He certainly didn’t hold back when he made rookie moves.

But underneath the gruff exterior, Cory has some begrudging compliments to pay him when he’s not in ear-shot.

“He’s a good guy. He tries hard every day. He’s come a long way.” He thinks about it and laughs. “Yeah, he’s come a long way. He’s doing excellent actually. Anyone can get into a piece of equipment and ‘drive’ it. Not everyone can operate it” I’m not about to break the code by telling Courtnall this. But apparently, I don’t need to. A few weeks later he called me at the end of the day.

“Man- Cory told me I did a hell of a job today. That’s what he said- a hell of a job” I could hear the pride in his voice. I talk to him a bit, and seems he’s had a good day.

“The head guy, Lloyd? He came out and was watching me for a few hours. He gave me a thumbs up- must have been doing something right!”

I managed to get Lloyd alone for a coffee, and he opened up about how this program came to be.

PETRONAS Canada’s president and CEO, Mark Fitzgerald. A few years ago, Mark’s vision was to come up with a program that was thorough, sustainable, and invested into the lives of local First Nations. Mark challenged his team to come up with a program that would positively impact the lives of First Nations and teach them skills and a trade that would benefit them long term. As I sip coffee with Lloyd, I see the passion in his face as he describes building this program, tweaking it, making sure it covered every point properly. I know this man helped build this program, but he is careful to give credit to the PETRONAS Canada site supervisors who make it all happen, his managers in Calgary who support the field staff, and a CEO who sparked the vision in the first place. As I’ve learned over the years, a course is only as good as the instructor, and this program is well-done. I watch his eyes light up talking about the young men and women that are currently in the program. I look at Corey and Courtnall, inspecting a hydraulic hose.

I wonder briefly if these men know how much their opinion means to Courtnall. I suspect they do. I wonder if PETRONAS Canada knows the impact this program has had on the men and women who are going through it. Somehow, I have to think this is what their president saw when he envisioned this a few years ago.

I walk over to Courtnal before I drive away and shake his hand. I ask him a question I think I already know the answer to“Where do you see yourself in ten years?” He doesn’t hesitate for a second.

“Training some guy like me from Blueberry River to run a grader” he laughs and I see Lloyd’s smile beam.

“Yes, that would be cool” he went on. “It would remind me of how I started, when someone took a chance on me.”

I know that’s where he will be in ten years. I hope I get to see it. I hope I get to be like a snow hare blending in the surroundings- not seen, but watching Courtnall train another young man or woman. I’d hide a smile as he came across gruff and hard to please. I’d see the way he said “good job” when his training finally got through. I’d see him take his time to not just train someone to drive it, he’ll do his best to make an operator out that person.

I’ll watch him pay it forward. I’ll be proud to say he worked for me.

What the heck- I’m proud of him now.

~Written by Trevor Argue

Over coffee, he told me it was a direct mandate from PAGE 15

IOGC 2017/2018 UPDATE EXECUTIVE SUMMARY REPORT

TO OUR STAKEHOLDERS In addition to Indian Oil and Gas Canada’s (IOGC) daily operations, the Modern Act, Regulations and Systems (MARS) project was a key activity and organizational priority.

The MARS project is comprised of three inter-related sub-projects with the following milestones targeted for completion in Fiscal Year 2017-2018 (FY2017-2018): Completing the gazetting and approvals processes for the Phase I or “core” regulations, then bringing both the Indian Oil and Gas Act, 2009 (IOGA, 2009) and the Phase I regulations into force, and finally implementing and administering both the IOGA, 2009 and the Phase I regulations beginning on the day both become law; Continuing systems development Resource Information Management System 2 (RIMS2) project, having secured both project and expenditure approvals in May 2016; and, Continuing the development of the Phase II regulations in consultation with First Nations, industry and provinces.

The MARS project was initiated in FY2010-2011 to guide the modernization of the Indian Oil and Gas Regulations, 1995 and the implementation of the 2009 Act and its new regulations. The first milestone enabling the MARS project was achieved once amendments to the Indian Oil and Gas Act received Royal Assent in May 2009. This resulted in a new Indian Oil and Gas Act, 2009 that will eventually replace the existing Indian Oil and Gas Act, 1974.

A Joint Technical Committee (JTC) – comprised of First Nation oil and gas technicians, Government of Canada officials from IOGC, Crown-Indigenous Relations and Northern Affairs Canada, and Justice Canada – worked on both the Indian Oil and Gas Act, 2009 and have since focused on the development of its supporting regulations. The Indian Resource Council (IRC) – an Indigenous organization that advocates on behalf of some 189 member First Nations with oil and gas, or the potential for such resources – provides oversight and direction for First Nation participants of the JTC. The IRC and JTC assists IOGC by facilitating First Nations’ awareness of the changes and the impacts to how future oil and gas operations will be conducted on their reserve lands.

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An agreement reached in 2014 between the department and oil and gas First Nations established a phased, or staggered, approach for regulatory development. First, the 2009 Act plus a set of Phase I, or Core, regulations would become law. Next, regulations would continue to be developed and implemented until the existing Indian Oil and Gas Regulations, 1995have been entirely replaced by new, modern regulations. IOGC’s new legislative and regulatory regime will be implemented by modernized business practices, supported by new or enhanced information systems.

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During FY2017-2018, two significant milestones were reached on the MARS project.

Firstly, the new official, or Blue-Stamped, regulations were produced by Justice Canada in September 2017. It is projected that these Draft Phase I regulations will undergo the required departmental approvals processes leading to their consideration by Treasury Board for pre-publication in the Canada Gazette, Part I early in FY2018-2019. You may recall that Draft Phase I regulations were being readied for Treasury Board consideration in February 2017 when the process was put into abeyance as requested by First Nations.

Since then, important accommodations have been incorporated into the proposed draft regulations that would provide First Nations with greater authority and control over their oil and gas resources as well as the ability to customize each of their business deals.

The second significant milestone was achieved when the procurement process identified Sierra Systems as the prime contractor for both the Royalty Management and Case Management components of the RIMS2 project. By the end of Q3, Sierra Systems began progressively assembling a team – located both at IOGC and within their own offices. An earlier procurement process had identified Fujitsu Consulting Canada as the prime contractor for Petrinex data exchange with IOGC. Petrinex is the result of a unique provincial-industry partnership that created and which maintains the recognized, authoritative source for hydrocarbon volume and pricing information. The RIMS2 project is composed of these three components: 1) Petrinex data exchange with IOGC; 2) new Royalty Management functionality; and, 3) the introduction or piloting of Case Management at IOGC. Once fully implemented, the RIMS2 project will provide two important benefits:1) avoid potential disagreements between First Nations and their industry partners, namely in volume measurement and pricing; and, 2) improve both the accuracy and timeliness of IOGC’s royalty assessment process.

On the operations side, persistent, weak world oil and natural gas prices have resulted in:1) a movement away from dry gas plays to oil plays and liquids-rich gas plays; and, 2) fewer wells being drilled. In FY2017-2018, IOGC collected $62,583,701 on behalf of First Nations and issued a total of 9 new surface agreements and 10 sub-surface agreements. In addition, $77 million was invested by industry to drill and complete 45 wells on First Nations reserve lands. Greater details on IOGC’s operational activities are contained within this report.

As always, the progress over the past year would not have been possible without the dedication and contributions of IOGC’s staff, our partners, and our clients. Through hard work, effective partnerships, and perseverance, IOGC continues to build a strong foundation for implementing and administering its new Act and regulations, beginning on the day they both become law.

Sincerely, Strater Crowfoot Executive Director and CEO

Excerpt from IOGC Annual Report 2017-2018.

Full report available online at https://www.pgic-iogc.gc.ca/eng/1100110010469/1100110010470

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EXCERPT FROM CERI REPORT CANADIAN ENERGY RESEARCH INSTITUTE

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AN ECONOMIC ASSESSMENT OF THE INTERNATIONAL MARITIME ORGANIZATION SULPHUR REGULATIONS ON MARKETS FOR CANADIAN CRUDE OIL

Executive Summary

Impacts on Canadian Heavy Oil

A recent regulation by the International Maritime Organization (IMO) sets a global limit for sulphur in fuel oil used to power ships at 0.5% (by mass) from the current 3.5% starting in January 2020. This more stringent regulation restricting emissions from ships plying international waters could significantly change the crude oil landscape at regional and global levels. For example, the 2020 IMO sulphur regulation would require the removal of up to 12,000-16,000 tonnes per day of sulphur contained in the 3-4 million barrels/day of high sulphur bunker fuel used for marine transport. This change will propagate through the value chain; from the marine industry that will seek replacement fuels to refiners that produce bunker fuel, and to upstream oil producers who produce crudes that generate high sulphur residues used in bunkering. Canada is one of the major producers of high sulphur heavy crude oil with production growing steadily since 2008. Bitumen production is expected to reach 3 million bbl/day by the end of 2018 and continue increasing. Canadian heavy sour crude is refined primarily in Canada and the United States(US) where there are sufficient capacities of complex refineries to handle this type of crude. Canadian bitumen contributes very little to bunkering since it is consumed by the complex refining in Canada and the US. Instead, Canadian crude will have to compete for US refining space on netback refining value with other crudes that currently contribute to High Sulphur Fuel Oil (HSFO) supply. The Canadian Energy Research Institute (CERI), therefore, used a refinery modelling and optimization approach to investigate the impact of the IMO regulation on Canadian crude production and price.

The price discount on Western Canada Select (WCS) crude with respect to the West Texas Intermediate (WTI) price point will expand significantly due to the IMO regulation.

Figure E.3 illustrates how the refinery margin loss affects the WCS (heavy sour) pricing relative to WTI (light sweet). The dotted lines represent the WCS pricing that is historically discounted at $13/bbl plus the discounts resulting from the IMO regulation for the three scenarios considering a medium refinery in the US. Figure E.3: WTI and WCS Price Differential (2017 US$) Source: CERI Under the plausible scenarios, a refinery margin loss of $16/bbl to $20/bbl between 2020 and post-2025 is expected to be directly transferred to a light-heavy differential. The cumulative differential which includes the historical WTI-WCS discount of $13/bbl sums up to $31/bbl- $33/bbl of WTI-WCS differential within the study period. Our analysis shows that new SAGD projects with SORs of less than 3 m3 /m3 are likely to break even when the IMO regulation is introduced whereas those with SORs greater than 3 m3 /m3 will operate at a loss. A significant volume of SAGD-derived bitumen production could be affected. Based on SAGD production data, about 574,000 bbl/day of bitumen produced in Alberta has an SOR of more than 3 m3 /m3 (CanOIl, 2017).

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To read the full report please visit the CERI website at ceri.ca/assets/files/Study_175_Executive_Summary.pdf

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ELEMENTS

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CORPORATE MEMBERSHIP PROGRAM The Indian Resource Council released its corporate membership program.

Benefits of the program include reduced rates to IRC events such as our annual conferences and golf tournaments. In addition members receive listing and access to our corporate membership database as well as our directory included in Elements magazine.

ELEMENTS

Sign up today at: www.nebce.com/register

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The Indian Resource Council welcomes you to the 2019 Global Petroleum Show

Visit us at booth 1356 featuring Indigenous Energy companies.

The Indian Resource Council was formed in 1987 by Chief’s representing the oil and gas producing First Nations. IRC advocates on behalf of our national membership for their energy interests.

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