Letters to the Editor

September 4, 2019 · by Admin2017 · 0

Economic development in a First Nations community

Part III: Loon River Incorporated

(Brian Pitcairn worked for the Loon River, among several other First Nations, over a 40-plus-year career in north central Alberta in a variety of roles. This is the third of a series of three letters to the editor by him on the subject of economic development, based on his experience in Loon River.)

To the Editor:

For Loon River First Nation to develop the economic opportunity made available to them under the terms of the Loon River – Storm Energy Petroleum Development umbrella, it was necessary for the First Nation to reorganize its corporate self. This it did, into an entity known as Loon River Cree Contractors Ltd, or LRCC for short. This was necessary because a First Nation cannot have a normal corporate existence under the federal Indian Act.

LRC Contractors started out as a company with great potential, but limited means. An internal review of the situation yielded a result that illustrasted the path to growth. The company suffered from lack of working capital and owning its own equipment. The one great asset they did have was a skilled workforce from the community that owned its own tools for oilfield and timber work. Therefore we determined that we would use the debt-free asset we did own to generate the working capital we needed. That asset was our labour force.

At that time the oilfield in Red Earth area used a great deal of skilled saw labour for lease clearance in restricted areas, and on seismic lines, and clean-up on pipeline right-of-ways, plus clean-up work on timber cut areas.

Since saw/labour crews in the area with no related camp costs to pay were non-existent, we were able to obtain the relevant work. During the first two years of its efforts, the company as able to retire all its debts and acquire net equity. This enabled it to buy its first piece of equipment from Finning Ltd. in Peace River, a D5H hi-track Cat. This enabled us to get crew work requiring a dozer with the crew.

It also enabled LRCC to establish a long-term working relationship with Finning in the area of maintenance, equipment and insurance. Finning in Peace River was simply excellent to deal with.

Generally, the work performed by LRC Contractors was labour work on maintenance, saw work on road ROW and seismic line clearing, road grading and lease site and line clearing with our equipment. If we were short of equipment for the job, we would rent what was needed from other contractors in the area.

LRCC often worked as a sub-contractor as well. We had good relations with these firms and as part of our corporate relations plan we would travel to Calgary every year and meet with area oil companies. We briefed them on our work history and the interests we had in working for them. We were careful to sort through work we could handle and work not in our structural capacity to complete. By the third year of our operation, the company was able to issue a dividend to the First Nation equal to one third of its net profit. The First Nation Council left the remainder of net value in the company as working capital.

In the long run, the success of the company and its management group created an economic lift effect throughout the community.

During winter months company employment averaged a hundred souls employed full time. As most of these people were men supporting families, the community felt the effect of a net rise in family living standards and improvement in care of children. During the calendar year an average of 250 T4 slips were issued, most involving locals. The other effect produced by company work was on the cost of federal social welfare. The employment created, between the months of November to May would typically reduce the cost of social assistance by about 75 per cent.

The company also ended up owning a pool of new construction equipment backed by financing from Caterpillar, with equity in every machine. This enabled LRCC to earn a return on each machine, as rental costs always swallowed up any profit made.

The long-term story of Loon River First Nation’s involvement with the oilfield was twofold:

a) The oil industry assisted greatly with Alberta in creating the Loon River reserve land base. Storm Energy actually advocated Loon River’s position among its fellows in accepting federal petroleum leases. Industry would move quicker than the government did on the issue.

b) Employment relating to the oil patch over time lifted the family economic standard in the community. Newer and better vehicles, a better diet and food supply and people were better clothed. This was something no government social welfare program could ever achieve and never did achieve.

The First Nation finding its place in the resource industry achieved these gains, with little or no help from government. Fifty years of government programming have achieved no significant gain in living standards for First Nations in Treaty 8 area. Where improvement, in most cases, has happened is due to connections to the resource industry.

The path taken by Loon River First Nation in this regard has pointed out a pathway relegating government to the junior role in the effort to improve First Nations material life.