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Jeffrey Jones: Canada’s oil can fill U.S. gap, but at what cost?

Jeffrey Jones: Canada’s oil can fill U.S. gap, but at what cost?

JEFFREY JONES

CALGARY

AUGUST 1, 2017

The Globe and Mail

Husky edam east steam operations

Ugly images of unrest on the streets of Caracas are no reason for Canadian oil producers to cheer, even if their margins improve as a result.

Venezuela is sinking into a chaotic and violent morass as its economy collapses and, in a desperate play for self-preservation, its President cracks down on political opposition.

A once-mighty founding member of the Organization of the Petroleum Exporting Countries (OPEC), Venezuela is struggling with shortages of food and other staples as the downturn in crude prices enters a fourth year. As many as 125 people have been killed in street protests since April.

Now, U.S. President Donald Trump and his officials have raised the possibility of sanctioning the country’s oil exports, which have been in steady long-term decline with the drop in investment in Venezuela’s oil industry.

If that happens, Canada will be called upon to help fill the shortfall. The countries are competitors in the U.S. Gulf Coast region, where refineries are geared to process the heavy oil that both produce in large volume. Prices for Canadian heavy barrels have already climbed sharply to account for such an eventuality.

Western Canadian Select, a cocktail of conventional heavy oil and bitumen from the oil sands, sold on Tuesday for about $10 (U.S.) a barrel less than West Texas Intermediate (WTI), the U.S. benchmark. That’s a razor-thin discount by historical standards. A year ago, the spread was $13.90 a barrel under WTI. In late 2013, it blew out to nearly $40, though WTI was nearly $100 a barrel at the time.

As the situation unfolds, the big question is: How much heavy oil can Canadian producers ship to the Gulf Coast? The answer seems to be: Not all that much more. At least in the near future.

In the past month, shares in some heavy-oil producing companies have edged up as investors weigh the odds of improving margins while Texas refineries start asking around about alternative supplies. The producers had all been squeezed in the industry downturn, and stand to make up some lost cash flow from the tight price spread.

Here’s where things stand. The United States has added Venezuelan President Nicolas Maduro to a growing list of officials facing financial sanctions after a contentious vote allowing him to change how government policies are made and adopted. Critics charge that the victory gives Mr. Maduro’s ruling party virtually unlimited power, and, indeed, at least two opposition leaders have already been arrested in overnight raids.

The country’s energy industry – its main source of revenue – may face sanctions in the form of an embargo on oil into the United States, though that’s not a certainty. U.S. imports from the South American country have fallen to 708,000 barrels a day from 1.2 million barrels a decade ago. By contrast, Canada’s shipments to the United States have doubled to nearly 3.6 million barrels a day in the same period, though most of those barrels go to U.S. Midwest refineries.

Over all, a disruption in Venezuelan supplies in the United States would lift global oil prices. North American prices would climb by the greatest magnitude, said Michael Tran, commodity strategist at Royal Bank of Canada. He points out the Trump administration may be wary of slapping a ban on Venezuelan oil as it could mean a spike in domestic fuel prices, resulting in a hit to the economy just as Mr. Trump trumpets recent gains.

Canada’s crude is easily substituted in the southern U.S. market, hence the perceived opportunity. There are other supplies though, including heavier Saudi Arabian barrels that are handy if needed.

One veteran Calgary-based crude trader says Canadian oil can fill gaps where needed, but he points out that pipeline routes to the U.S. Gulf are chronically full. Rail transport is not currently economical, unless a shipper has long-term capacity, because the price spread between Alberta and the oil hub of Cushing, Okla., is less than the cost of a train ticket. “We are already getting as much Canadian oil south as we can economically,” the trader says.

The situation will undoubtedly benefit TransCanada Corp. as potential shippers consider whether to sign up for capacity on the newly resurrected, 830,000 barrel a day Keystone XL pipeline proposal to the southern United States from Canada.

In the meantime, though, given the market conditions, there is only so much more oil Canada can get to where it might be needed.

 

 

Chippewas must pay energy giant’s legal bills in lost court battle

Chippewas must pay energy giant’s legal bills in lost court battle

Enbridge said it is reviewing the court’s decision to award costs to the oil company

CBC News Posted: Jul 28, 2017 8:40 AM ET Last Updated: Jul 28, 2017 12:34 PM ET

The Supreme Court of Canada has ordered the Chippewas of the Thames, a community of 3,000, to pay energy giant Enbridge’s legal fees after an unsuccessful attempt by the First Nation to stop the company’s ambitions on its controversial Line 9 pipeline.

The pipeline, built 40 years ago, runs through Chippewas territory, and this week’s top court decision allows the company to not only reverse the flow of heavy crude, but also increase capacity along Line 9.

The Chippewas believe the aging pipeline could rupture and cause an oil spill that would create an environmental catastrophe.

Chief Myeengun Henry
Chief Myeengun Henry, right, said the First Nation will continue to fight to protect the Thames River from the pipeline he worries is old and at risk of rupturing. (Kate Dubinksi/ CBC News)

“The ruling said that Enbridge wins court costs, so that means we have to pay them,” said Myeengun Henry, newly elected Chippewas of the Thames First Nation chief.

The Chippewas’ legal bills total $600,000, Henry said.

Enbridge has not indicated what its costs will be, said spokesperson Suzanne Wilton, noting in a statement that it is still reviewing the decision.

“There has been no determination by the court regarding fees, which would require an application where none has been made,” Wilton said.

Relationship building

Following the Supreme Court’s decision, Enbridge said it was committed to building a strong relationship with the First Nation.

That may be difficult if the financial burden of the energy giant’s legal bills are too steep for the Chippewas of the Thames.

“It’s clear that Enbridge wants to develop a stronger relationship with Chippewas of the Thames,” said Trevord McLeod, director of the Natural Resources Centre at the Canada West Foundation.

“But it looks like it’s going to be a rough road.”

The Chippewas have said they will continue to fight against the pipeline, which could include acts of civil disobedience.

 

 

 

James Smith Cree Nation chief wants meeting with Shore Gold executives

James Smith Cree Nation chief wants meeting with Shore Gold executives

Alex MacPherson, Saskatoon StarPhoenix

Published on: June 9, 2017 | Last Updated: June 9, 2017 5:10 PM CST

Shore Gold FALC aerial
An aerial view of Shore Gold Inc.’s proposed diamond mine in the Fort à la Corne forest east of Prince Albert. Shore Gold Inc. / Saskatoon

The chief of a First Nation near a proposed diamond mine in the Fort à la Corne forest east of Prince Albert says he is “not impressed” with communication from the company behind the project, and wants to meet with its executives to discuss the project’s potential environmental impact.

James Smith Cree Nation Chief Wally Burns called for the meeting with Shore Gold Inc. days after the company announced it was in “preliminary negotiations” with an unnamed third party over its mineral properties and as a separate six-month consultation process with the provincial government comes to a close.

“All I’m asking is for them to come to my community and come and express their thoughts with my people,” Burns said, adding that the last Shore Gold executive he met with was its former vice-president of corporate affairs, who left the Saskatoon-based company in early 2012 as it worked to reduce costs in the face of global economic uncertainty.

Burns said while he is not opposed to the $2.5 billion-mine going ahead, the ongoing effects of the Husky Energy Inc. pipeline spill into the North Saskatchewan River last July made him more aware of the importance of preserving his band’s traditional hunting and fishing lands.

“I think my people have known this forest for a long, long time,” he said.

Shore Gold staked its first claim in the forest in 1995. The mine project received environmental approval from the federal government in 2014; former environment minister Leona Aglukkaq said at the time it was “not likely to cause significant adverse environmental effects when (proposed) mitigation measures … are taken into account.”

The company has not, however, received environmental approval from the provincial government.

Earlier this year, the Saskatchewan government committed $137,000 to a second round of consultations with James Smith Cree Nation after a public review uncovered what a government official described as “issues that had not been addressed.”

Ministry of Environment spokesman Darby Semeniuk said in an email this week that the consultations began in early 2017 and are “on track.” Once the consultations are concluded, the ministry will “evaluate all pertinent information” before deciding whether to issued environmental approval for the mine, Semeniuk said.

Shore Gold president and CEO Ken MacNeill said the company has not heard from the James Smith Cree Nation since the groups exchanged letters earlier this year. However, MacNeill continued, “we can understand that because they’re doing an awful lot of work with the government and we fully support both sides on that.”

MacNeill did not specifically commit to meeting with Burns, but said the company is looking forward to hearing from James Smith Cree Nation. Shore Gold is also looking forward for a response from the Ministry of Environment, which has not to date made any further requests for information, he added.

Shore Gold’s communication efforts have also been criticized by some of its shareholders. At its annual meeting last June, a contentious proxy vote engineered by concerned shareholders came within a few percentage points of ousting three of the company’s directors. Shore Gold’s chairman deemed the vote illegal but allowed the results to stand.

 

 

 

You can’t handle the truth? An excellent Globe and Mail environmental commentary gets universally ignored

You can’t handle the truth? An excellent Globe and Mail environmental commentary gets universally ignored

May 15, 20175:50 AM

Terry Etam

BOE Report logo.JPG

http://boereport.com/2017/05/15/you-cant-handle-the-truth-an-excellent-globe-and-mail-environmental-commentary-gets-universally-ignored/

Sometimes it pays to troll through the news, even a grubby old-fashioned newspaper. I grabbed a hard copy of the Globe and Mail in a hotel lobby on a recent trip, enjoying the nostalgic feelings of smudged ink and that sweet, familiar irritation that the Starbucks table was too small to lay it out properly.

Luckily, the hard copy transcended my petty grievances handily. There was a gem of an article buried on P4 of the business section, which is too bad, because it was brilliant. It was on the opinion page of the Monday business section, the real estate equivalent of a house next to a meat packing plant, with the smallest, un-bolded headline font currently available on the market. This is a crying shame, because the article’s contents should form the cornerstone of environmental discussions for the next five years.

[Note:  The article being referred-to can be found with a different title “It’s time to rethink our messaging about environmental change” HERE]

It didn’t help that the article first appeared in print and online with a bizarre title: “Why ‘green’ might not be the colour of money,” which was an unfortunately weird headline that gave no clue as to content. Most headlines consist of turbocharged hype that dials in on one sensational quote/statistic/inference in the article and waves it around like a head on a pike to attract eyeballs. Given the shelf life of non-sensational online stories, it’s no wonder the piece went nowhere before it somehow found a more useful title: “It’s time to rethink our messaging about environmental change.” But even this title is abysmal; the entire content of the piece is not about changing a message, but rethinking the work of the entire climate change industry. No wonder the Globe’s editors were unable to describe it correctly; it’s a concept that’s never been seen in public before.

The article was the work of two academics (Jennifer Lynes and Sarah Wolfe, both environmentally departmented professors from the University of Waterloo), who pointed out something that many of us feel deep down: that current efforts to promote environmental innovation and change are not working. The greenest segment of the population is getting greener, and the other 90 percent would totally love to help but sorry I just bought this SUV and a Greenpeace sticker on the back just would not work at all.

The analysis of the current stalemate was brief, but laser-sharp and accurate. Four simple points are made that should be enough to derail the current monolithic environment industry and start a new revolution, but they will have a hard time because the media couldn’t have cared less.

The article’s four pertinent points are: that only a fraction of the population is motivated by the health of the planet; that more information does not lead to more action; that scare tactics don’t work; and that environmental products have to be desirable before they become adopted. Each point is supported by logical and balanced reasons that are hard to argue with, which explains why the article was pointedly ignored by even its owner.

The piece is a refreshingly clear statement about where the environmental debate should be going. The agenda has been hijacked by people who make a very good living waging war against industry and consumers, and really couldn’t care less if they are doing anything constructive. An expensive war is being waged that makes most feel like hypocrites, behaviours are only marginally changing, and we need a reboot of the goal and the tactics needed to get there.

Can anyone imagine shrill organizations like the National Resources Defense Council, or 350.org, actually sitting down and having an intelligent conversation about these 4 points, all of which are undeniably true? It would never happen. Those types of anarchic cash sinkholes aren’t interested in progress, they are interested in a fight. The NRDC claims in its banner that it uses “law, science, and the support of 500000+ members” to “stop the assault on the environment.” 350.org claims to be “building a global climate movement” from the “bottom-up by people in 188 countries.”

They are doing nothing but providing employment for thousands of people who are very angry that society won’t play the way they want them to. They attack like Mongol hordes the infrastructure that average citizens relentlessly and unfailingly demand. That ever growing demand is the “assault on the environment,” a direct result of the bottom-up demand of “people in 188 countries.” There’s the problem, protesters.

Blocking a pipeline or convincing a pension fund not to invest in oil stocks does not have even the most infinitesimal impact on the amount of oil that will be consumed today, tomorrow, or in 20 years. They are feel good issues for the environmental industry because they demonstrate progress, which for the other 90% demonstrates nuisance.

There is no evidence that this environmental progress amounts to anything. The war that was waged against Keystone XL was long and ugly, and when Trump reversed the decision it hardly made the news, which it would have if it were the environmental catastrophe it was made out to be for half a decade. It was an artificial and ineffectively symbolic war created for media purposes, with the only true result being that a lot of money was absorbed in the middle. (Come to think of it that sums up investment banking as well. But I digress).

It is so sad that such a great story, from scientists who are as much scientists as the IPCC’s legions, was so widely ignored. The fact that it was speaks volumes about the current quality of the discussion – there is none. Environmental discussions have become religious discussions. The ten percent that are driving the climate change debate are trying to get the other 90 to adopt their god, but the commandments are way harder than the old Christian ones. Sure, I can promise not to kill anyone, but give up flying? Outta my way, weirdo.

Sincere environmentalists will want to take note of articles like these, and because they are thoughtful they will start to move down the proper axis, from destruction to construction, rather than the false battleground between good and bad that is currently being promoted.

Trudeau to Force a Hybrid Carbon Price on Holdout Provinces

Trudeau to Force a Hybrid Carbon Price on Holdout Provinces

by Josh Wingrove

May 18, 2017, 10:00 AM CST

Bloomberg

Justin TrudeauCaption contestBrad Wall and Brock Lesnar

(Photos added above for editorial comment by site)

Canada’s federal government will tax fossil fuels and cap industry emissions in any province that doesn’t bring in its own carbon price.

Prime Minister Justin Trudeau’s government revealed a “backstop” plan Thursday in Ottawa that would essentially force the minimum carbon price he announced last year onto holdouts. He’s also pledged to return any revenue, though has yet to determine whether the funds will go to provincial governments or directly to citizens and businesses.

Saskatchewan, home to mining giants Potash Corp. of Saskatchewan Inc. and Cameco Corp., is the foremost objector and has threatened legal action. The carbon price also comes amid warnings Canada could be at a competitive disadvantage with the U.S. under President Donald Trump’s administration.

The federal plan, detailed by Environment Minister Catherine McKenna’s office, is a mix of a carbon tax for consumers and a cap-and-trade system for major industry. It is akin to the system used in Alberta, Canada’s energy hub and biggest emitter.

Industrial firms emitting over 50 metric kilotons each year would face caps on emissions, paying fines if the cap is exceeded and earning credits, which could be sold to other firms, for staying under. The federal backstop would also include a tax on fossil fuels that amounts to 2.3 Canadian cents per liter of gasoline in 2018, rising to 11.6 cents per liter in 2022 (roughly 32 U.S. cents per gallon).

“Polluters should pay,” McKenna said in an interview. “And if you figure out how to innovate, you will pay less.”

Exemptions and Application

There are a series for exemptions, including for commercial buildings, hospitals and some farming activities. The tax on fuels kicks in next year, while the industrial “output-based pricing” begins Jan. 1, 2019.

The plan would only affect provinces that don’t design their own carbon-pricing regime, or those whose systems fall short of federal standards. Trudeau’s government is “evaluating” if it will send the tax revenue to people and businesses rather than to provincial governments. That gives skeptical premiers a choice: They can impose their own price and manage the revenue from it, or refuse and see the money flow to individuals and firms.

“We feel provinces are best able to determine what system makes sense for them,” McKenna said.

Trudeau announced last year that Canada would set a minimum carbon price of C$10 per metric ton in 2018, rising to C$50 per ton in 2022, and pledged the federal government wouldn’t use any of the revenue. Canada’s four most populous provinces already have some form of carbon price.

Wall and Trump

Saskatchewan Premier Brad Wall, a conservative, has pledged a court battle over the federal plan. McKenna said she’s confident in her government’s legal position and called on the province to implement its own price.

Her chief of staff and parliamentary secretary met with Wall’s representatives early this week to discuss the issue, she said. “Saskatchewan had on the table a proposal that was not all that different to deal with heavy emitters,” she said. “My message is you have an opportunity to design a system that makes sense for you.”

Trudeau’s environment minister brushed aside concerns about the impact on business given the less proactive U.S. stance under Trump, saying industry has been consulted. “This is a system we believe actually does respond to those competitiveness concerns,” McKenna said.

The proposals detailed Thursday are part of what the government calls a technical paper, and it is taking public comments until the end of June before unveiling its final carbon pricing system.

 

 

 

Saskatchewan Oil Drilling Numbers Double in First Quarter

Oil Drilling Numbers Double in First Quarter

Released on April 10, 2017

Saskatchewan’s petroleum industry is showing signs of a positive start for 2017 after results for drilling activity during the first three months of the year were more than double the figures of 2016.

sk oil drilling april 2017

“An increase of more than 450 wells drilled is an optimistic indicator for our oil industry and, by extension, Saskatchewan’s economic outlook for the year ahead,” Energy and Resources Minister Dustin Duncan said.

The number of wells drilled in the province from January to the end of March was 856, compared to 399 wells drilled during the same period in 2016.

“Continued oil field activity at this pace is encouraging news,” Duncan said.  “It contributes positively to communities throughout our province and is part of our economic growth.”

Saskatchewan’s oil and gas industry is responsible for an estimated 15 per cent of the province’s gross domestic product.  A total of 1,648 oil wells were drilled in Saskatchewan in 2016, which was down 10 per cent from 1,831 oil wells drilled in 2015.

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For more information, contact:

Deb Young
Economy
Regina
Phone: 306-787-4765
Email: deb.young@gov.sk.ca

 

 

$20-billion gulf-coast expansion good news for Saskatchewan oil

And a lot of the oil processed by these expansions will come from Saskatchewan and Alberta!

Trump cheers Exxon plan to spend $20B on Gulf Coast projects

DAVID KOENIG, THE ASSOCIATED PRESS  03.06.2017

 Exxon CEO

Darren Woods, Exxon Mobil CEO, speaks during CERAWeek at the Hilton Americas,Monday, March 6, 2017, in Houston. (Melissa Phillip/Houston Chronicle via AP)

 

HOUSTON – President Donald Trump and Exxon Mobil Corp. exchanged praise for each other on Monday as the company announced plans to create thousands of jobs by spending $20 billion over 10 years on plants along the Gulf Coast.

Exxon’s plan started long before Trump entered the White House, however. It includes investments that began in 2013.

Exxon said Monday the work would create 12,000 permanent jobs — the energy giant currently has about 71,000 employees — and 35,000 construction jobs.

Exxon announced its plan in a news release in which CEO Darren Woods was quoted as saying that such big investments “require a pro-growth approach and a stable regulatory environment and we appreciate the President’s commitment to both.”

A few minutes later, the White House issued its own release about Trump congratulating Exxon. One paragraph in the White House release is nearly identical to a passage in Exxon’s.

The president followed up on Twitter, saying that “Buy American & hire American are the principals at the core of my agenda,” although he apparently meant that those are among his principles.

In his third tweet on Exxon, Trump wrote, “45,000 construction & manufacturing jobs in the U.S. Gulf Coast region. $20 billion investment. We are already winning again, America!”

In December, Trump plucked Exxon’s then-CEO, Rex Tillerson, to be his secretary of state. Tillerson and Trump met Monday shortly before the Exxon and White House press releases.

Woods, the new chairman and CEO, said Monday that Exxon would expand at several current plants and build a new one to create petroleum products for export.

Woods said the investment plan responds to the rising supply of natural gas. There has been a boom in production created by techniques such as fracking, or hydraulic fracturing, in shale formations like the Permian Basin of Texas and New Mexico.

Exxon recently agreed to buy rights to about 250,000 more acres, doubling its presence in the Permian at a cost of up to $6.6 billion — a huge bet on the hottest oil and gas field in the country.

Woods said hydraulic fracturing has “opened up a whole new energy future for the United States … (that) is turning the U.S. from energy importer to energy exporter.”

Exxon announced the spending plan at a major energy-industry conference in Houston that draws executives and oil ministers from around the world.

The company said it plans 10 expansion projects at refineries and chemical and liquefied natural gas plants around Beaumont and Baytown, Texas, and Baton Rouge, Louisiana. It also wants to build a new chemicals plant at a location yet to be determined along the Gulf.

The sum of $20 billion would be roughly equal to Exxon’s total capital spending last year. The company announced last week that it plans to increase overall investments to an average of $25 billion a year from 2018 to 2020.

Shares of the Irving, Texas-based company rose 37 cents to close at $82.83. They have lost about 8 per cent so far this year.

 

 

 

Keystone XL can be made from non-U.S. steel: White House

Fri Mar 3, 2017 | 3:25pm EST

REUTERS

Keystone XL can be made from non-U.S. steel: White House

pipe

A depot used to store pipes for Transcanada Corp’s planned Keystone XL oil pipeline is seen in Gascoyne, North Dakota, January 25, 2017.REUTERS/Terray Sylvester

The Keystone XL oil pipeline does not need to be made from U.S. steel, despite an executive order by President Donald Trump days after he took office requiring domestic steel in new pipelines, the White House said on Friday.

“It’s specific to new pipelines or those that are being repaired,” White House spokeswoman Sarah Sanders told reporters on Air Force One, when asked about a report by Politico that Keystone would not need to use U.S. steel, despite Trump’s executive order issued on Jan. 24.

“Since this one is already currently under construction, the steel is already literally sitting there, it’s hard to go back. Everything moving forward would fall under that executive order,” Sanders said. The southern leg of the Keystone project is completed and started pumping oil in 2013. Some pipe segments that could be used for Keystone XL, which would bring oil from Alberta, Canada to Nebraska, have already been built.

Former Democratic president Barack Obama rejected TranCanada Corp’s (TRP.TO

) multi-billion dollar Keystone XL pipeline, saying it would not benefit U.S. drivers and would contribute emissions linked to global warming.

Trump’s order expedited the path forward for TransCanada to reapply to build the line. Economists told Reuters days after Trump issued the order on U.S. steel requirements that it had many loopholes, would not be easily enforceable, and could violate international trade law.

Even if there were no loopholes, U.S. steelmakers would receive negligible benefit from Keystone XL, because they have limited ability to meet the stringent materials requirements for the project.

The office of Canadian Prime Minister Justin Trudeau on Friday said it welcomes the allowance of non-U.S. steel, calling it a “recognition that the integrated Canadian and U.S. steel industries are mutually beneficial.”

TransCanada said it was encouraged by the White House statement on non-U.S. steel and that its presidential permit application on Keystone was making its way through the approval process.

Canadian Public Safety Minister Ralph Goodale said on Twitter that allowing non-U.S. steel was “important for companies like Evraz Steel,” a local subsidiary of Russia’s Evraz PLC, which had signed on to provide 24 percent of the steel before Keystone XL’s rejection by Obama.

(Reporting by Melissa Fares on Air Force One, Ethan Lou in Calgary and Timothy Gardner in Washington; Editing by Chizu Nomiyama)

 

 

 

Charts: Canadian oil exports reached record highs at the end of 2016

Charts: Canadian oil exports reached record highs at the end of 2016

By Deborah Jaremko

March 2, 2017, 2:37 p.m.

http://www.jwnenergy.com/article/2017/3/charts-canadian-oil-exports-reached-record-highs-end-2016/

Growing oilsands production from both mining and in situ projects contributed to Canadian crude oil exports reaching an all-time high in November 2016, the National Energy Board (NEB) says.

This surpassed the previous high set almost a year before, with volumes being curtailed in the intervening months in part because of the Fort McMurray wildfire disruption in spring of last year.

The November figure is also a 300,000 bbl/d increase from October 2016, the NEB says.

“Most of the increase was shipped on pipelines to the United States (U.S.) Midwest Region (PADD II), but marine exports to the U.S. East Coast (PADD I) and railed exports to the U.S. Gulf Coast (PADD III) also had notable increases,” the NEB says.

“Pipeline exports reached an all-time high of 2.99 million bbls/d, marine exports reached a 28-month high of 272,000 bbls/d, and railed exports reached a then 14-month high of 120,000 bbls/d.”

cdn-crude-destinations

cdn-crude-transportation-modes

Encanto Potash and Muskowekwan First Nation sign new mining regulation agreement

Encanto Potash and Muskowekwan First Nation sign new mining regulation agreement

ALEX MACPHERSON, SASKATOON STARPHOENIX

Published on: February 28, 2017 | Last Updated: February 28, 2017 5:04 PM CST

 

 encanto

Muskowekwan First Nation Chief Reginald Bellerose, left, and Encanto Potash Corp. President and CEO Stavros Daskos. 

BRYAN SCHLOSSER / REGINA LEADER-POST

 

Encanto Potash Corp. has signed an agreement with Muskowekwan First Nation and the provincial and federal governments that it says will pave the way for construction of its proposed potash mine on the reserve northeast of Regina.

The agreement is expected to lead to the first First Nations Commercial and Industrial Development Act (FNCIDA), legislation that applies existing provincial rules to large-scale projects on First Nations land, the Toronto-based company said in a news release.

“By achieving this milestone, the first ever for such a planned large scale operation in Canada, we have been breaking entirely new ground,” Muskowekwan Chief Reginald Bellerose said in a statement.

“(We are not only ensuring) that we ourselves are a significant resource player in Canada for generations to come, but paving the way for other First Nations to achieve self-source revenues and a self-dictated future full of promise.”

Encanto has been exploring the possibility of a potash mine in southern Saskatchewan for years. It signed a joint venture agreement with the First Nation in 2010; in January, it announced two new 20-year sales agreements with India-based firms.

Gary Deathe, Encanto’s director of corporate development, said in an email that the FNCIDA agreement is a “long awaited and important step” toward establishing the mine.

Encanto still needs to raise around $3 billion to cover its capital costs.

Because projects regulated under FNCIDA apply existing provincial regulations to First Nations land, “it gives investors and developers certainty by ensuring that they are dealing (with) … well known and understood (rules),” Encanto said in the news release.

“This represents another critical piece being in place to allow for the eventual development of the first potash mine on First Nation land in Canada and the first … to complete the FNCIDA,” Encanto president and CEO Stavros Daskos said in a statement.

 

 

 

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