Document reveals influence of oil and gas lobbyists on B.C. officials after Indigenous Rights ruling

In the wake of a precedent-setting Indigenous Rights case in June 2021, B.C.’s ministry of energy did something rather unprecedented: it immediately cancelled summer auctions for new oil and gas tenures.

This sudden closure of oil and gas opportunities in response to the Blueberry decision — a B.C. Supreme Court ruling, which determined the province violated the Treaty Rights of Blueberry River First Nations by permitting and encouraging damaging industrial development — sent a shudder through the industry that continues to reverberate across the country today.

Documents released to The Narwhal through freedom of information legislation show petroleum and natural gas (PNG) lobbyists told public servants that B.C. could lose more than $90 million in annual revenue and up to 10,000 jobs as a result of the Blueberry decision. These stark warnings were then passed on to senior B.C. government officials, including Fazil Mihlar, deputy minister of Energy, Mines and Low Carbon Innovation.

Mihlar declined The Narwhal’s interview request.

“The ministry continues to receive information from PNG operators highlighting the impacts,” reads an Aug. 16, 2021 briefing note, which was heavily censored prior to being released to The Narwhal.

The internal document reveals the extent of influence major oil and gas industry executives have over information and advice that reaches the highest levels of the B.C. government.

In fact, the briefing note confirms the advice sent to Deputy Minister Milhar was largely based on “feedback” from two of the country’s most influential oil and gas industry lobby groups, the Canadian Association of Petroleum Producers and the Explorers and Producers Association of Canada.

This feedback included warnings that the court ruling was “significantly” affecting company cash flow and would make it difficult for companies to honour contracts as the province faced a “flight” of investments to other jurisdictions with “greater regulatory certainty.” It also warned that this would ultimately affect government revenues, social programs as well as indirect jobs related to industry.

A footnote in the document explained that the estimate of the risk of up to 10,000 job losses was based on an “extrapolation” of calculations done by Alberta-based oilsands giant, Canadian Natural Resources Limited.

When asked whether anyone in government analyzed or verified the claims and estimates prior to sharing them with the deputy minister, the ministry told The Narwhal in a statement that it “uses a number of best available information sources to derive an estimate of the potential economic impact” of the Blueberry decision.

It declined to identify any of those sources of information.

It’s unclear whether public servants provided any additional context to the government about how industrial activity was affecting Indigenous Rights or contributing to the climate crisis.

Experts say this paints a skewed picture of what would happen if B.C. reworked how fossil fuel projects are considered, reviewed and approved in light of Indigenous Rights and territorial claims, and also if the province shifted its focus to cleaner and less controversial forms of energy.

Document raises questions about advice provided to government officials in B.C.

Nancy Olewiler, an economist who previously served as a director of provincial organizations such as BC Hydro and Translink, explained that public servants are expected to provide complete advice to government, based on evidence, and be held accountable when they do not.

“Evidence-based research and analysis should be a core foundation for policy,” she told The Narwhal. “I don’t see how any decision-making process can go forward without aligning Indigenous Rights and Title and climate objectives.”

Former Vancouver city councillor Andrea Reimer said that the one-sided nature of the briefing note highlights a flaw in the structure of most governments. Reimer, who was a councillor at Vancouver City Hall from 2008 to 2018, said this level of influence can translate into stalled progress when it comes to policy.

“Governments are designed — at least in the colonial era… — to solve yesterday’s problems tomorrow,” said Reimer, now an adjunct professor at the University of British Columbia’s school of public policy and global affairs.

She added that the briefing note’s portrayal of the oil and gas industry’s views reflects a “government that was designed to exist in a stable climate, a stable political environment [and] a stable social world where white people were dominant and other people were not,” she said.

“We need a mindset willing to accept that we need new tools — we can’t keep using the same old tools and get different outcomes.”

As Blueberry decision stalls activity in gas-rich Montney region, oil and gas lobbyists warn of investment ‘flight’

In its June decision, the B.C. Supreme Court concluded that decades of overlapping industrial development “significantly diminished the ability of Blueberry members to exercise their rights to hunt, fish and trap in their territory as part of their way of life.” 

B.C.’s northeast is home to the Montney shale gas formation, one of the largest natural gas deposits in the world and home to the province’s natural gas fracking boom. It’s also home to extensive forestry operations and sprawling hydroelectric developments, all of which cumulatively degrade the landscape. 

It’s these cumulative impacts which were at the heart of the Blueberry court case, meaning new projects in the area can’t be considered according to their localized impacts, but must be assessed for how they contribute to an already heavily industrialized landscape. 

The province of B.C. elected to not appeal the court’s ruling.

The internal briefing note provided a critical analysis of the government’s response to the court decision, explaining that the move by provincial officials to suspend permits and authorizations had “created economic risk and is impacting oil and gas activities in B.C.”

The revenue figures included in the note were based on an assessment of members conducted by the two oil and gas industry lobby groups. This assessment was “limited to priority projects and applications as reported by their members and represents approximately 40 per cent of [petroleum and natural gas] production in the province,” the briefing note stated.

The Canadian Association of Petroleum Producers declined to respond to The Narwhal’s questions about whether it believed the advice sent to government was providing a complete picture of the regional economic situation.

But industry officials maintain that the impacts of the court ruling were stark and continue to reverberate as the government maintains a suspension on new oil and gas projects in the northeast part of the province.

Brad Herald, vice-president of Western Canada operations for the Canadian Association of Petroleum Producers, told The Narwhal in an email that the industry was encouraging the province “to reach a long-term solution with the First Nations impacted by the court decision as soon as practical so producers with operations in the area can plan their activities and budgets for 2022 and beyond.”

Olewiler said there are a range of issues for the government to consider when responding to the Blueberry ruling. These could include addressing local needs such as protecting regions that are at risk of losing jobs to prevent any dramatic shifts.

“One memo should not be indicative of overarching government policy,” she said. “I think they’re genuinely trying to balance the different interests — every [minister’s] mandate letter has climate change in it and every mandate letter has Indigenous relations in it.” 

“How do you keep the economy afloat at the same time as meeting all these objectives?”

Maegen Giltrow, legal counsel for the Blueberry River First Nations, is working with the community on securing the details of a final agreement with the province. She said the current impacts of the ruling in the northeast are minimal.

“I’m not aware of there being job impacts or even financial impacts to date,” she said. “We had interim measures protecting core areas from forestry already. There’s still pre-approved forestry and drilling happening because they weren’t the subject of the court order.” 

“What companies are uneasy about is their ability to plan for the future.”

B.C. energy ministry estimates on job losses include those outside oil and gas industry: economist

While industry prepares for the worst, experts say the potential lost revenue flagged by lobbyists does not pose a threat to the province’s economy.

“The lid is now put on any expansion on new projects — that means there will be for the foreseeable future, no new drilling,” Werner Antweiler, energy economist and associate professor and chair of the University of British Columbia’s strategy and business economics division, told The Narwhal. “That’s not necessarily a big problem for the province overall.” 

He explained the sector has “a relatively small share” in B.C.’s economy, noting the service industry represents around 76 per cent of the province’s gross domestic product as compared to the oil and gas sector, which represents 1.2 per cent. 

“This is not really what the province depends on in terms of tax revenue.”

As for the 10,000 job losses, Antweiler said the estimate lacks context and noted it likely includes indirect or ancillary jobs linked to industry workers in the region, such as teachers and hairdressers. 

“It’s just the spillover effect. Some of that multiplier … is local employment because the services are often provided by local people.”

B.C.’s oil and gas sector only directly employed 4,700 people in 2021, according to the province’s labour market statistics database. The dataset noted the sector generated an additional 7,000 jobs in “support activities,” but that figure also includes data relating to the mining sector.

Antweiler added jobs associated with the oil and gas industry are rarely long-term.

“Once the wells are drilled, they’re drilled, right? And then they keep on producing and they require very little labour. The only significant labour impact is during the startup phases.”

“The impact, one shouldn’t overestimate, because a lot of that work is simply quite temporary and not long-term,” he said. “Ultimately, it’s not really helping to build a resilient and diversified economy in the northeast of the province.”

Yet the impacts of the court ruling aren’t limited to the northeast.

The briefing document also noted the court ruling could directly impact supply demands of B.C.’s biggest gas project, LNG Canada, a joint venture of multinational energy companies Shell, Petronas, Mistsubishi Corporation and Korea Gas Corporation.

The liquefaction and export facility, currently under construction in Kitimat and slated to commence operations in 2025, would receive 2.1 billion cubic feet of natural gas from northeast B.C. daily via the Coastal GasLink pipeline, a project led by TC Energy.

A spokesperson for LNG Canada did not directly answer a question about whether the decision would impact its supply needs but told The Narwhal the project recently passed the 50 per cent completion mark.

“We’re moving swiftly and safely towards commissioning and start-up, and to fulfilling our promise of delivering a world-class LNG facility in Kitimat,” the spokesperson wrote in an email, adding the project has already contributed $3.6 billion in contracts to B.C. businesses, including more than $2.8 billion to local and First Nations-owned businesses.

Alberta’s energy regulator compiled a 14-page document on the impacts of the ruling in response to a freedom of information request, but redacted all 14 pages on the basis they contained “legal advice and analyses that are subject to legal privilege.” 

Natural Resources Canada told The Narwhal the court decision provided clarity on the connection between industrial development, provincial decision-making and Indigenous Rights.

“The Government of Canada recognizes the importance of addressing potential cumulative impacts of natural resource projects, including their potential impacts to Indigenous Rights,” the federal agency wrote in an email. 

“With respect to economic significance, the B.C. Montney region — which overlaps with [Blueberry River First Nations] territory — is an important natural gas producing region,” the agency added, noting the oil and gas sector employs 178,500 workers directly and 415,000 indirectly across the country. A majority of those jobs — both direct and indirect — are based in Alberta but the federal agency said B.C. accounts for around 15 per cent, or 62,000, indirect jobs. 

“The decision reinforces the importance of ensuring resource development happens in a way that respects Indigenous Rights so it remains an important source of revenue for affected Indigenous groups and Canada more broadly.”

‘We know this is the way forward for true and lasting reconciliation’: B.C. minister

B.C. Minister of Energy and Mines Bruce Ralston declined an interview request, but his ministry sent a written response to questions from The Narwhal.

“The B.C. Supreme Court decision was unprecedented, requiring significant changes to how resource activities are administered and approved in the territory,” the statement said. “We recognize the social and economic implications of the court’s decision, and the uncertainty it has raised for communities and industry, but we know this is the way forward for true and lasting reconciliation.”

In October, the province signed an initial agreement with the Blueberry River First Nations, allowing 195 forestry and oil and gas projects to proceed on the grounds they were approved prior to the ruling, a provision granted by the court. The agreement included a provincial commitment to provide $65 million to support habitat restoration and cultural initiatives on the First Nations’ territory.  

“We anticipate a new agreement in the near future that will enable us to begin moving forward with a permitting framework that respects Treaty 8 Rights while balancing the economy, local jobs and the environment,” the ministry said.

Giltrow, legal counsel for the Blueberry River First Nations, was cautiously optimistic.

“They’re not authorizing further development right now,” she told The Narwhal in an interview. “That’s amazing, that’s enormous. That is, ‘show me, don’t tell me.’ But in terms of what the ultimate solution looks like, until we get to an agreement, I can’t say for sure.” 

“It’s big and complicated and multifaceted,” she continued. “However, we’re helped by having the power of the court order behind us. Nothing lights a fire under everybody’s behinds like an injunction that doesn’t allow any further permitting.”

While the Energy Ministry’s briefing note warns of economic trouble ahead, the Ministry of Environment and Climate Change Strategy told The Narwhal its CleanBC initiative includes plans to attract and secure new investments in clean technology and said it aims to meet emissions reductions targets without adversely impacting the economy. 

“Addressing climate change in a cost-effective manner is a priority for our government and is increasingly becoming a requirement for international business and economic opportunities that support people in communities across British Columbia,” the ministry wrote in an emailed statement.