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Fort McMurray Today: Fort McKay, Shell break off oilsands talks

Today staff
Thursday February 21, 2008

An exclusive deal first inked between Fort McKay First Nation and Shell Canada in 2006 to develop an oilsands operation on treaty lands has expired.

But that doesn’t mean the Fort McKay band is out of the oilsands business. In fact, it still wants to develop the estimated 8,300 acres of treaty land, and welcomes potential partners to the table for talks, even Shell.

Jeff Winsor, Fort McKay First Nation spokesman, said this morning when the two groups entered into the exclusive agreement, a finite timeline was set for the end of the 2007 calendar year “when we wanted to see something happening.” That deadline came and went with no movement forward on the project.

According to the original statement released by Shell at the time, the agreement recognizes the right and interest of the Fort McKay First Nation to commercialize land received under its treaty land claim settlement by leasing it to Shell for potential incorporation into the Athabasca Oil Sands Project, and receiving royalty payments on production.

At the same time, the agreement was to facilitate the First Nation’s entry into the oilsands business through an option to acquire and work with Shell on the development of Lease 90 for potential incorporation into Albian Sands. Construction had been expected to begin in 2009 with production ramping up as early as 2012.

“We were looking for a best case scenario for Fort McKay,” Winser added, explained the lack of forward-movement, whether or not that was going to be along the lines of upgrading, semi-refining or early stages of excavation. “We had pinpointed exactly what we wanted … (but) couldn’t really come to terms with Shell and its partners as to how we would work the deal.”

A confidentiality agreement remains in place between the two former partners preventing in-depth disclosure.

“We’ve agreed with Shell, it’s time for both parties to walk away and see what they want to do,” said Winser.

He added there is no acrimony about the decision, it’s just the nature of the business. “We had a timeline set, timeline has passed.”

“We’re putting the lease on the open market now, and willing to talk to anyone, Shell included. If Shell wants to come back to the table at some point, that’s OK.”

Whether Shell will act on that invitation remains to be seen as Janet Annesley, Shell spokeswoman, declined to comment citing commercial confidentiality.

She concurred with Winsor on why the expiration occurred. Annesley added a “number of the precedent conditions were not met.”

Those conditions are matters that need to be resolved in order to go forward, she explained. They include regulatory, fiscal and commercial terms.

“Fort McKay remains an important business supplier and partner,” said Annesley. “Clearly, we value our business relationship with them, and our relationship as neighbours in Wood Buffalo.”

Winsor shared that affinity, saying “we still have a good working relationship with Shell.” and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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