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First Nations Being Courted to Back Massive Bitumen Refineries on Their Lands

Companies behind refining proposals are trying hard to avoid the mistakes Enbridge made on Northern Gateway pipeline—but an uphill fight awaits.

By Elizabeth Douglass, InsideClimate News

Despite last week's approval from the Canadian government, uncertainty still dogs Enbridge Inc.'s Northern Gateway oil sands pipeline largely because of a vow from key aboriginal communities to block it.

Others in the oil industry are trying hard to avoid the mistakes Enbridge made when it comes to approaching Canada's powerful First Nations about projects that could contaminate their lands and waterways.

Pacific Future Energy Corp.'s recent refinery proposal is the latest example.

Earlier this month, the company unveiled plans for a $10 billion refinery in British Columbia that would convert Alberta's tar sands bitumen into gasoline, diesel and jet fuel for export to Asia and other markets. Pacific Future Energy pledged to form a "full partnership" with affected First Nations, provide permanent jobs and build the "greenest refinery in the world."

Enbridge's struggle to win acceptance for the Northern Gateway project "is a lesson in terms of how not to engage with First Nations," said Jeffrey Copenace, vice president of indigenous partnership for Pacific Future Energy. "The First Nations have been viewed as an impediment to business, historically in this country, both by governments and industry, and we feel that’s wrong."

Two other companies, Kitimat Clean Ltd. and Eagle Spirit Energy Holdings, have announced bitumen refining projects and taken steps to curry favor with British Columbia's indigenous groups. They have also promised jobs and less environmental risk compared to Northern Gateway's export plan.

"They're all trying to build themselves on the backs of how bad Northern Gateway has done things, and they figure if they are a little bit better that somehow people are going to fall all over themselves," said Art Sterritt, executive director of Coastal First Nations, a coalition opposed to the Northern Gateway project. "They're all doing exactly the same thing. They're saying pick me, pick me, pick me. The reality is nobody's picking anybody."

The $7 billion Northern Gateway pipeline, which was approved by the Conservative government of Prime Minister Stephen Harper on June 16, would transport diluted bitumen (dilbit) from Alberta to a proposed marine terminal on the northern coast of British Columbia. There, the dilbit would be loaded onto tankers and shipped to overseas markets.

That last part of the plan—carrying dilbit out to sea through fragile areas vital to First Nations' marine economy—became particularly controversial after an Enbridge pipeline leaked a million gallons of dilbit into a Michigan river. The 2010 incident alarmed British Columbians because emergency crews couldn't contain the spill and Enbridge has yet to fully cleanse the river of sunken globules of bitumen.

Backers of all three of the refinery projects have touted their proposals as environmentally less risky because they eliminate the need for tankers full of dilbit by converting it to fuel or light crude oil before exporting it. Pacific Future Energy would be filling export tankers with refined fuels, and those liquids would evaporate if spilled into the ocean, according to Samer Salameh, the company's executive chairman. Because of that, Salameh told Huffpost Alberta, the company's proposed refinery "is a solution to everybody's problem."

"We cannot risk the future of British Columbia’s cherished coast by shipping raw bitumen," Salameh said in Pacific Future Energy's June 10 announcement. Salameh believes it's in Canada's national interest to get Alberta's oil riches into international markets, but he said "it shouldn't be done at the sacrifice of B.C.'s coast or broader environment, and must be done in full partnership with First Nations."

Sterritt isn't convinced. Pacific Future Energy would still need to feed its coastal refinery with dilbit, which means it will eventually need a pipeline such as the Northern Gateway to deliver the heavy crude from Alberta.

"The one thing that most of these people seem to forget is that it's not just about the coast, it's also about transporting bitumen through the headwaters of the Fraser and the Mackenzie and the Skeena [rivers], and there are no guarantees of being able to avoid a spill there," Sterritt said.

Environmentalists concerned about climate change aren't likely to applaud the refinery plans, either, because they don't halt or reduce the carbon pollution that stems from extracting the tar sands oil, processing it and then burning the fuel derived from it.

"From a climate point of view, these refineries don't really make a lot of difference...as soon as more of that oil starts to get shipped [from Alberta], we have increased emissions," said Josha MacNab, director of British Columbia for the Pembina Institute, an environmental think tank based in Calgary. Switching from dilbit tankers to fuel-laden tankers isn’t a big improvement, she added, "Because any spill of any kind of fossil fuel is going to have a very damaging impact on our environment, and our ability to clean those up is questionable."

But the companies behind the refining proposals are optimistic. They believe they've found a way to boost support and quell environmental opposition to exporting Canada’s oil riches through British Columbia.

Their plans stress three factors that they say will differentiate the refinery projects from the Northern Gateway pipeline and export project. Those include:

+ A better relationship with First Nations. As Pacific Future Energy's Copenace put it, "I've heard of previous negotiations where companies go in with, 'this is your stake, and this is your percentage, these are your jobs, this is our route, and that’s how we’re going to do it—so sign here. That’s unacceptable in this day and age." Copenace has First Nations roots and served as deputy chief of staff to former Assembly of First Nations chief Shawn Atleo.

Eagle Spirit Energy Holdings, which announced a multifaceted export plan with a refinery in April 2014, is led by Calvin Helin, an author, businessman and First Nations leader in British Columbia. Partners include the B.C.-based Aquilini Group and David Tuccaro, a well-known Alberta aboriginal entrepreneur and oil sands investor.

+ More jobs. Pacific Future Energy said initial employment at its refinery would be in the hundreds, but that the payroll would grow to 3,000 jobs once it's expanded to its target capacity. Kitimat Clean’s project, which is backed by B.C. businessman and newspaper owner David Black, includes a $21 billion refinery, plus an oil pipeline, gas pipeline and tanker fleet. It said it would create 3,000 jobs at the refinery alone.

+ More palatable environmental characteristics. Pacific Future Energy said its refinery would capture carbon emissions and employ technologies to make the plant have near-zero net carbon emissions. Kitimat has touted its refinery as "engineered to be the cleanest upgrading and refining site in the world."

Eagle Spirit Energy's plan attempts to lessen the environmental threat of a dilbit spill by converting the bitumen into light crude oil before sending it to the coast for export.

Pacific Future Energy and Kitimat will still need to transport dilbit from Alberta to their respective refineries, but last year, B.C. Premier Christy Clark applauded that approach. Exporting dilbit-derived fuel would require smaller tankers filled with liquid that evaporates when spilled, a concept that "radically reduces the environmental risks associated with the shipping of oil off our coast to Asia," she said.

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