First Nations lose oil revenues due to lower consumption and drilling

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In a windswept corner of the Blood Tribe’s land, southwest of Albert, is a firefighter who rises more than three stories above the ground and reaches three kilometers deep. It is one of two new wells to have been drilled in the First Nation in the past year, as the downturn in the industry has reduced drilling in Western Canada.The well was drilled in December and started operating in February, less than a month before oil prices plummeted further as the pandemic spread around the world. Fuel consumption has dropped sharply as countries continue to respond to the virus, while oil production remains relatively high worldwide.

For First Nations who depend on the collection of royalties and rents from petroleum activities on their reserve lands, these funds quickly dried up. In fact, it becomes more expensive to manage the production of oil and gas on First Nations lands than the amount of money raised from industry.

Indian Oil and Gas Canada (IOGC) is the federal agency, fully funded by Ottawa, responsible for overseeing the production of oil and gas on these lands and has a monthly budget of approximately $ 1 million. In May, when the most recent data are available, the agency raised only about $ 740,000.

“It doesn’t make sense,” said Chief Roy Fox of the Blood Tribe. “More money is spent than we realize. ”

Fox is fully aware of the financial situation in the oil zone, as there are approximately 300 oil and gas wells on the Blood Tribe’s lands, and the First Nation has a vested interest in some between them. Compared to the start of the year, revenues from oil and gas activity are down 75%, according to Fox.

WATCH | Chef Roy Fox on the impact of low fees:

Revenues from the Blood Tribe’s oil operations have fallen 75% in recent months compared to the start of the year. 1:25

Royalties are falling due to lower commodity prices and lower production levels for some companies as some wells become unprofitable.

“In March, April and May, we were really struck by this slowdown. Things are picking up a bit, but not as fast as we would like to see, ”he said.

The First Nation uses the revenues to provide programs for seniors and youth, improve housing, provide social programs and invest in other commercial programs, among other initiatives.

“Because of the recession, we will not be able to help as much,” he said.

This Blood Tribe First Nation oil well is owned by Tamarack Valley Energy of Calgary. The Blood Tribe holds an equity interest in some of the wells on their land. (Kyle Bakx / CBC)

The Indian Resource Council, which represents First Nations with oil and gas reserves on their territory, calls on the federal government to increase royalties to a minimum of $ 4 million per month.

“This is a truly troubling time,” said Stephen Buffalo, president of the group. “It is very important right now that our Prime Minister is really looking at our communities to see if we can do something more to make up for what has been lost.” ”

The board also requested a special allocation for funds to clean up oil and gas wells in Western Canada.

First Nations’ incomes have dropped by about 80% in the past decade as commodity prices have fallen.

The declines “are expected to continue,” said Strater Crowfoot, CEO of IOGC, in an emailed statement.

WATCH | Stephen Buffalo on the occasion of cleaning up inactive wells:

The CEO of the Indian Resource Council does not want First Nations to miss the opportunity to restore inactive oil and gas wells. 1:22

“We have heard how difficult the decline in First Nations oil and gas revenues has been for First Nations communities, businesses and individuals. “The Government of Canada is working with First Nations and their member organizations to explore support initiatives.”

In April, the federal government announced $ 307 million in assistance to help Aboriginal businesses and $ 133 million in June to stimulate the Aboriginal economy.

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