The Union of British Columbia Indian Chiefs (UBCIC) is warning “buyer beware” when it comes to investment in the controversial Trans Mountain pipeline.
In an open letter sent out to First Nations last week, UBCIC condemned the project.
“There’s a desperate effort to recruit Indigenous involvement, Indigenous support,” says UBCIC Grand Chief Stewart Phillip..“In an effort, in a clumsy effort, to convince the financial institutions and the pension plans that these are somehow now ethical investments. And of course, we know nothing else could be further from the truth.”
The cost of the pipeline has almost quadrupled to $21.4 billion from original estimates.
Phillip says because of these cost overruns, Trans Mountain backers are now turning to First Nations as part of a last-ditch effort to save the project.
Calgary-based Project Reconciliation is one of the groups trying to facilitate a First Nations purchase of the pipeline from the federal government.
Senior managing director Stephen Mason says COVID-19 and catastrophic weather events have contributed to the cost overruns.
However, Mason says with the help of increased toll fees for oil companies, the project remains financially viable.
“One, we believe that the $21.4 (billion dollars) is still on the high side with contingency built-in,” he says. “And two, that the tolls will take up to absorbing $15 billion.
“So, there is a delta there but from there then the capacity piece to the tolls escalate at 2.5 per cent per year. So, there is enough room in there that you can transact the deal.”
Regardless of profits, Phillip says the pipeline is a bad investment for First Nations for another reason.
He says these communities should not be part of a project that will only further contribute to climate change.
“It’s not who is involved in the business end of oil and gas pipelines,” he says, “It’s the garbage products that go through these pipelines that represent an enormous threat to the environment and an increase in greenhouse gas emissions and more towns burning to the ground and more flooding events.”
Mason agrees that Canada needs to start thinking about a transition to a green economy.
However, he says the Trans Mountain pipeline could be part of that transition.
“There is no reason why that this corridor cannot be ultimately repurposed for zero-carbon based fuels. And to have the Indigenous ownership of the right-of-way is a critical piece of the value chain.
“So, they’re buying a right-of-way and having oversight to the environmental impact of this right-of-way. But the key piece is you’re buying a utility corridor that can be repurposed.”
The expansion is essentially a twinning of the existing 1,150-kilometre pipeline from just outside Edmonton, Alta., to Burnaby, B.C.
Once completed, it will increase capacity from 300,000 barrels of oil per day to 890,000 barrels.