Ivison: Secret Foreign Deal Could Slash Propane Exports and Leave Canadians Worse Off
Part of his strategy for economic transformation, Mark Carney stated that his administration aims to create “port facilities, logistics networks, and new trading routes” to aid in broadening Canada’s overseas sales channels.
The Port of Prince Rupert, located on the northwestern coast of British Columbia, asserts it is undertaking this with a $1.35 billion initiative known as the Ridley Island Energy Export Project (RIEP) That is anticipated to be finished by next year.
The Prince Rupert Port Authority (PRPA) claims it has granted "time-limited exclusive rights" for exporting LPGs (which encompass liquid petroleum gases like propane and butane) to REEF, a partnership between companies. Vopak Royal from the Netherlands and AltaGas based in Calgary .
Upon launching in its first stage, the port authority states that REEF will offer the capability to handle seven million metric tons of bulk liquid energy products for export, primarily propane, which comes via rail from Alberta. Based on present pricing, this volume has the potential to yield annual revenues close to $6 billion.
The intended capacity exceeds three times the present volume from the current export facility. (Calgary-based Pembina Pipeline also ships approximately 300,000 metric tons annually from an installation close to Prince Rupert.)
As Canada's expanding liquefied natural gas (LNG) sector generates more output, there has been an uptick in the production of propane—a secondary product from this process. Industry leaders project that upcoming ventures could boost annual propane supplies by up to four million metric tons by 2030. This comes as nations such as South Korea and Japan express increasing interest in acquiring Canada’s substantial excess propane resources.
At first glance, this is precisely the type of growth Canada requires during this critical time.
However, the public relations spin conceals a less admirable story of what local Indigenous groups allege as betrayal, dishonest negotiations, and the enforcement of a propane monopoly. This situation has enabled an overseas firm to essentially limit Canada’s capacity for exporting gas.
The Metlakatla and Lax Kw'alaams First Nations — together known as the Coast Tsimshian — retain their unextinguished Indigenous rights over the territories where the PRPA functions.
In a correspondence addressed to Anita Anand, the transportation minister, Chief Robert Nelson of Metlakatla stated that the port authority has breached the Crown’s duties towards First Nations by entering into a covert "monopoly pact" with Vopak, the Netherlands-based firm.
Nelson stated that the port authority and Vopak "worked together to conceal this exclusive arrangement for many years" during their consultations with First Nations regarding the REEF project.
The assertion is that in 2015, the PRPA granted Vopak an exclusive export privilege for propane along Canada’s western coastline for many years, keeping the details of this agreement confidential from everyone, including the federal transport minister, until 2023.
The REEF initiative commenced consultations with First Nations in 2018, such as the Coast Tsimshian. Agreements aimed at mutual benefit have been established, ensuring Indigenous involvement across various aspects of the Prince Rupert Gateway projects. According to the PRPA, thirty-seven percent of individuals they employ directly or who contribute to port activities are from an Indigenous background.
However, importantly, the First Nations claim it wasn’t disclosed that the PRPA had signed an exclusivity pact with Vopak, which would block others from joining the propane export industry.
When the Coast Tsimshian recognized the opportunities within the propane industry and aimed to enter the export market, the broader details of this "confidential agreement" came to light.
Previously, The Crown acknowledged the rights and title of the Coast Tsimshian people and gave them a 10 percent ownership share in the business that purchased the former Ridley coal facilities back in 2019.
According to the Coast Tsimshian, after Trigon Pacific Terminals proposed to the Prince Rupert Port Authority (PRPA) for constructing an additional terminal, the details of their agreement with Vopak became public knowledge only following the rejection of this proposal.
They claim they would never have consented to the REEF project if they had been aware it would end up harming their own business interests.
“When we provided input on the REEF project, we were unaware that we were agreeing to one that contained a hidden clause limiting our future access to our ancestral lands,” Nelson stated. “It’s evident that the PRPA’s government-to-government discussions were carried out with malicious intent.”
In his correspondence with Anand, Nelson stated that the port authority did not reveal the details of the monopoly pact, which he saw as being "contrary to the honor of the Crown."
The Coast Tsimshian have strongly supported developments in Prince Rupert.
Nelson stated that Trigon’s collaboration with the federal government demonstrates how to foster economic expansion while promoting reconciliation. However, he cautioned, “this entire situation is now at risk.”
The PRPA has exacerbated its illegal actions by preventing Trigon from moving forward with their project," he stated. "By taking this stance, the PRPA is undermining fundamental Indigenous rights, the Alberta energy sector, and the economic well-being of Canada.
Nelson mentioned that Alberta energy companies looking to increase their presence abroad will encounter an arbitrary limit on the quantities they can transport. This situation suggests that these firms might receive reduced prices due to having just one potential purchaser. The PRPA has bestowed upon Vopak-AltaGas what could become a profitable monopoly for exports.
This scenario has caused concern within Alberta. A senior figure from the UCP provincial government expressed their worries, stating, "If the port managers deceived the Indigenous communities, this would be problematic," according to the source.
The Coast Tsimshian have reached out to the federal government for intervention, yet they report receiving only silence in response.
A representative from Transport Canada informed the National Post that the port authority functions autonomously from the Canadian government, as established by the Canada Marine Act. "The Prince Rupert Port Authority establishes its strategic goals and makes independent commercial choices," they stated. "For inquiries about these matters and lease agreements related to the port operations, the port itself would be better suited to provide answers."
This could certainly be true, yet it is highly unusual for the minister at the time and high-ranking officials to remain uninformed regarding such a significant agreement. "It's unheard of," stated an individual acquainted with these occurrences. "They essentially secured control over the entire Pacific Gateway without informing the minister."
The port failed to directly address whether it had disclosed its accord with Royal Vopak to the Coastal Tsimshian during consultations regarding the REEF project when asked. A spokesperson named Olivia Mowatt stated that the organization had nothing to add on the matter. When this query was directed at Vopak, they did not provide any response by the publication deadline.
Frustrated, the Coast Tsimshian have initiated legal proceedings at the Supreme Court of British Columbia, fully aware that it may take an extraordinarily long time before their case is addressed. Despite this, they remain convinced that the Crown will once more be deemed to have neglected its responsibilities.
In such an instance, it brings into question the prospects for the future of the REEF project. The initiative might have to return to the consultation stage, without any guarantee of gaining approval from the Coast Tsimshian.
This would result in Canada having no additional propane export facilities, rather than the previously planned two.
Right as Canada aims to capitalize on chances for expansion, we're confronted with the potential downfall of another key energy export initiative, along with a severe erosion of faith in Crown-Indigenous relationships.
The incoming administration, whether it be the current one or its replacement following the upcoming election, needs to negotiate with Vopak and secure an agreement that prioritizes the construction of both projects.
National Post
jivison@criffel.ca
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