Indigenous investors are lining up to bid on Canadian pipelines TC Energy Corp. put up for auction this week as part of a $5-billion asset sale program.
On Wednesday, TC Energy chief executive François Poirier outlined plans to sell several projects by the end of 2023 to help fund the Calgary-based company’s expansion, which is projected to cost $34-billion. Along with raising cash, he said streamlining one of North America’s largest pipeline operators would drive “simplicity of corporate structure and the impact on our ability to achieve our sustainability goals.”
While Mr. Poirier steered clear of naming specific pipelines, analysts said two Alberta oil sands projects are candidates for sale. In a report, analyst Robert Hope at Scotiabank predicted TC Energy will sell its 50-per-cent stake in the 460-kilometre Grand Rapids pipeline, which connects refineries near Edmonton to oil sands properties north of Fort McMurray, and the 72-kilometre White Spruce pipeline, which feeds into Grand Rapids.
TC Energy spent $1.1-billion building the two pipelines and expects to raise significantly more from their sale. Its partner on Grand Rapids is PetroChina Canada Ltd., an arm of state-owned China National Petroleum Corp.
Bidders on TC Energy’s assets will include pipeline owners in Alberta and private equity funds, analysts predict, along with Indigenous communities, which increasingly are looking to equity stakes in resource projects to generate jobs, income and opportunities.
Willow Lake Métis Nation chief executive officer Justin Bourque said in an interview he has already reached out to TC Energy to offer help in approaching communities. “I’m very interested in what the strategy looks like and how they’re trying to roll that out,” Mr. Bourque said. “I think they are in position to have substantial impact for multiple stakeholders if that’s part of their strategy, and it should be part of their strategy.”
Mr. Bourque is also president of Athabasca Indigenous Investments, an umbrella group for 23 First Nations and Metis communities that acquired a minority interest in seven Enbridge Inc. pipelines for $1.12-billion in September. The Willow Lake Métis Nation is located south of Fort McMurray.
“We hope Indigenous equity is contemplated and that TC Energy is prepared to take a co-development approach on the structure of those deals with the Indigenous peoples that are impacted by the project,” said Niilo Edwards, executive director of the First Nations Major Projects Coalition (FNMPC), a federally-funded group that supports First Nations pursuing equity stakes in major projects.
TC Energy’s planned asset sales highlight the need for a national Indigenous loan guarantee program, said Billy Morin, managing director of Axxcelus Capital Advisory, a Calgary-based firm that helps negotiate deals between industry and Indigenous communities. First Nations groups want government-backed loans to help purchase equity stakes in major resource projects, and have flagged access to capital as a barrier to economic development.
The recent Enbridge deal, as well as previous transactions, have shown the value of the Alberta Indigenous Opportunities Corp., Mr. Morin said. The AIOC, founded in 2019, was set up to encourage Indigenous participation in resources and has since broadened its mandate to other sectors, including agriculture and telecommunications. Saskatchewan and Ontario also have Indigenous loan guarantee programs.
TC Energy already has Indigenous partnerships in its $11.2-billion Coastal GasLink pipeline. In March, the company signed an agreement to sell a 10-per-cent equity interest to two groups representing 16 Indigenous communities along the pipeline route.
Coastal GasLink is designed to ship natural gas from northeast British Columbia to LNG Canada’s export terminal now under construction in Kitimat, B.C., but the pipeline is contentious. TC Energy reached agreements with the elected band councils of 20 First Nations along the 670-kilometre pipeline route. But some Wet’suwet’en Nation hereditary chiefs and their supporters have consistently opposed the project, saying it is being built without Wet’suwet’en consent and in violation of the United Nations Declaration on the Rights of Indigenous Peoples.
As part of the asset sale program Mr. Poirier announced Wednesday, analysts said TC Energy will also likely auction off a 47.5-per-cent interest in the Millennium natural gas pipeline in New York State. The company values the stake at $475-million in its financial statements. Mr. Hope said recent investments in Millennium show the 408-kilometre pipeline is worth about US$1-billion. Another candidate for sale is TC Energy’s North Baja pipeline from Arizona to Mexico, which will likely fetch more than US$500-million.