Oil drop hits bands

Page 1

Oil rich bands in Alberta are feeling the pinch of lower international oil prices and may be forced to renegotiate lower royalty payments in order to remain competitive, says an Indian Minerals West officials.

Wally Dombroski, acting director with the Department of Indian Affairs department, says if bands want to stay in production they are going to have to consider some "reduced rates and sharing with the (oil) companies.

"The high royalties are really not competitive with those of the province and therefore bands will be required to consider reduced royalties," said Dombroski from his Calgary office Monday.

Although it is still too early to say how individual bands will fair under the new low oil price which tumbled during the last few weeks from a near $30 a barrel to around the $12 mark, most bands appear to be adopting a wait and see attitude.

However, the Stoney Indian tribe, west of Calgary, which is in debt to the tune of about $4.7 million, may be hit hardest.

The tribe formulated a repayment plan which would dissolve its debt in about five years. However, say Stoney sources, this plan was based on oil prices remaining around the $28 a barrel range.

The Stoney's financial difficulties go back to 1978 when, due to an error by Indian Minerals West, oil and gas royalties were overpaid. The tribe must now pay back the $6 million overpaid.

Indian Minerals West has also come under criticism recently in a report written by former IAA president Joe Dion. The report was prepared for the Department of Indian Affairs in 1984 but was kept under wraps by the department.

The report caused some controversy when it was leaked to the press in February because it stated the federal government is benefiting from its trustee position over Indian oil and gas royalties.

Because the "risk of impartiality exists," the report recommends the involvement of an independent third party in any restructuring of band and department authority.

In an interview shortly after the report was leaked, Dion confirmed that there has always been conflict between Indians and the Crown over oil and gas revenues.

"The money is in the Canadian Treasury and the government uses that money to lever its own loans from foreign sources - they benefit from it."

Don Allen, assistant deputy minister for economic development, confirms that Indian Minerals West has had its difficulties, but points out that although a shake-up in the department is needed, he will not go ahead until after he has consulted with Indian bands in Alberta.

Allen recognizes that many of the problems faced by Indian bands have been as a result of a DIAND decision to have separate departments for economic development and oil and gas administration.

"Now I am in charge of both areas, and I have a lot of good ideas, not only from the Dion report but also from my meetings with Enoch, Saddle Lake and Hobbema bands recently."

"We have some commitment there in the department and Ottawa to at least move the administration of oil and gas into the 1980s," he added.

Allen is currently organizing an oil and gas workshop to be held in Edmonton towards the end of next month. Only after this workshop will any new incentives in oil and gas administration be announced, he added.