Gambler First Nation forms unique partnership with oil firm

A small Manitoba First Nation has formed a unique partnership with an oil exploration company that they say could help lift the community out of povertyand help prove they're owed money for oil wells drilled next to their land.

Gambler First Nation and Elcano Exploration Inc. announced Tuesday they are working together to bring two wells to the First Nation in a deal that could see millions flow into the community and benefit their 58 registered residentsand more than 200 off-reserve residents.

The deal will not only see the First Nation reap 17 per cent in royalties from the wells, but will also see 40 per cent in working interest.

"It's going to change the way we do business with First Nations across Canada because they will have a major role in their oil production, their money management, so it's a benefit that I see very beneficial forElcanoand Gambler working together,"said Chief David LeDoux.

It's the first joint partnership of its kind in Manitoba,thanks to a federal government grant allowing the First Nation to invest in the project's capital costs, Gambler First Nation said, adding most other deals for resource extraction are for royalties only.

Brad Gans, who works withElcano, said the company was approached by Gambler First Nation about possible oil opportunities on their land several months ago. While Elcano was exploring, Tundra Oil and Gas drilled two offsetting wells that were successful.

"We used some of the seismic data that has been shot in the area and we have decided to enter into a partnership with them to drill a well on their lands," Gans said.

LeDoux said testing shows there is likely 20 years worth of oil on their land. While exact figures depend on fluctuatingoil and gas prices, it's likely millions will flow into Gambler First Nation as much as $1 million per well per year for the next 20 years.

Gambler First Nation forms unique partnership with oil firm

7 years ago

Duration 2:16

Gambler First Nation forms unique partnership with oil firm

Gambler First Nation vs. Tundra Oil and Gas

In 2015, Gambler First Nation launched a lawsuitagainstTundra Oil and Gas Partnershipwhich isowned by Winnipeg-based James Richardson & Sons Ltd. and the Province of Manitoba, which licensed the company's drilling on land next to the First Nation reserve land.

Gambler stated they felt betrayed by the company for drilling next to their lands and not approaching the First Nation about possible partnerships.

Gambler First Nationis asking Court of Queen's Bench for an order to quash thelicencesfor the oil wells and provide compensation for oil that was extracted from the ground near the reserve.

LeDouxsaidhe invited the company toGamblerland to do exploration work with the belief the company would share its findings with the First Nation people and make them partners in oil wells with Tundra.

"For that not to happen didn't even enter my mind,that we wouldn't enter into a partnership,"LeDouxsaid.

Gambler is continuing its exploration work while the lawsuit is before the courts, Stephen Pillipow, Gambler First Nation's Saskatoon-based lawyer, wrote in an email to CBC News.

"There are many issues to be addressed in the court proceedings, but one of them is to prove oil exists under their reserve lands," he said.

Timeline of a partnership

"Gambler FN went through the IOGC[Indian Oil and Gas Canada] call for proposals process to get proposals for their oil and gas development," MikolayCupial, a consultant for the First Nation based in Regina, saidin an email to CBC News."The chief was not satisfied with the offers that came in because they did not offer a partnership like he wanted for his First Nation.

"That's when they went to INAC to ask for assistance to engage oil-and-gas consultants to determine what they actually might have for oil and gas and how to get it out of the ground."

From there, Gambler First Nation began discussions with "a number of different oil companies to see who wanted to help them drill a well on their terms," Cupialsaid. "That's where Elcano came in."

The cost of drilling the wells will cost about $700,000, Gans said. In order to pay for their share of the project, a feasibility study, business plan, consultants and training, Gambler First Nation received $340,000 from theCommunity Opportunity Readiness Program through Indigenous and Northern Affairs Canada.

Ganssaid the wells are still in the planning stages. While the company has acquired the mineral rights from Gambler, they have to do a survey and an environmental assessment. The process could take months, depending on what the environmental assessment finds.

There have been 48 new well licence approvals in Manitoba so far this year. This one has yet to beapproved.

'Huge opportunity'

Grand Chief Jerry Danielsof the Southern Chiefs' Organization Inc. called the partnership a "huge opportunity" for Gambler First Nation.

"It's the first of it's kind in our region in Manitoba so it's a model in our area," Daniels said.

"Let's face it, there's hundreds of oil wells operating right now in Manitoba, and you know how much we're benefiting from that? Zero. There's no joint ventureagreementbetween any First Nation community and any company right now in southern Manitoba where Indigenous peoples are benefiting from land that is owed to them."

"The message is to industry more than it is communities. It's the industries thatneedto start working with First Nations."

Brian McGuigan, manager of aboriginal policy at the Canadian Association of Petroleum Producers, said the oil-and-gas industry is listening. In 2013 and 2014, oil and gas companies in Alberta procured $3.9 billion of goods and services from Indigenous-owned companies, and more companies are looking for partnerships.

"It's a great time,"McGuigansaid. "Right now it's a downturn, companies are re-evaluating how they do business. So when companies and industries are reevaluating, it's a great time to become involved with them. There's room and space for change right now."

LeDoux said he isn't blind to the fact the First Nation has a lot to learn about managing their money, and that a sudden influx of cash could overwhelm his community.

"We're basically a welfare community," he said. "[People]survive on $200 a month, so the sky's the limit on how far we can go with this investmentand planning.

"It's hard to deal with people who can't see down the road as far as what business can do, what money can change," he said. "So it's a training process for them, [and] it's a training process for me to understand how they feel."

Ultimately, LeDoux said, he hopes the partnership will provide a framework for other Manitoba First Nations to employ.