ERCB Approves Construction of Sour Gas Plant

Lubicon Lake Indian Nation
Little Buffalo Lake, Alberta
Phone: 403-629-3945
Fax: 403-629-3939

Mailing address:
3536 - 106 Street
Edmonton, Alberta T6J 1A4
Phone: 403-436-5652
Fax: 403-437-0719

May 01, 1995

On February 23rd the Provincial agency charged with supposedly regulating the energy industry in Alberta -- the Energy Resources Conservation Board (ERCB) -- reaffirmed its earlier decision to approve construction and operation of Unocal's sour gas processing plant at Lubicon Lake. The new Unocal sour gas processing plant is located less than 3 kms. from the area where the Lubicons have been seeking for over 50 years to establish a Lubicon reserve. Enclosed for your information is a copy of a "news release" and "executive summary" on the ERCB decision which, among other things, incorrectly states that the Unocal plant is located "about 4 kilometres" from the proposed Lubicon reserve. (A copy of the full 28 page ERCB decision plus attachments can be obtained by contacting the new Alberta Energy and Utilities Board (AEUB) at the address indicated on the back page of the attached "news release". [Alberta Energy and Utilities Board Information Services, Main Floor, Enegy Resources Bldg., 640 Fifth Avenue S.W., Calgary, Alberta, T2P 3G4, (403) 297-8190])

Although informed of Lubicon opposition to the Unocal sour gas processing plant before commencement of plant construction, the ERCB didn't decide to reconsider its earlier approval of the plant until after the plant had already been built -- significantly biasing the eventual decision. Similarly reaffirmation of its earlier decision was then announced after the ERCB had already been amalgamated into a new and even more political super Provincial "regulatory" agency called the Alberta Energy and Utilities Board (AEUB). In other words you can't complain to ERCB about its decision. Conveniently by the time the decision was issued the ERCB no longer existed.

The new AEUB was created in the midst of considerable controversy last fall when Alberta Premier Ralph Klein simultaneously dumped Deputy Premier Ken Kowalski from the Provincial Cabinet and appointed him head of the soon to be established AEUB. At the time Kowalski was arguably the second most powerful man in the Provincial government and was widely regarded to be reigning Provincial pork barrel king. One of Kowalski's claims to fame came from calling environmentalists "pot smoking anarchists". Another of Mr. Kowalski's claims to fame came from saying people who support pay equity for women are communists since, he explained, it "means everyone in society will get the same amount of money". Those are of course not normally the kind of credentials or public persona one would expect in the head of a supposedly "independent, non-partisan, quasi-judicial Provincial regulatory body".

Kowalski's appointment as head of the new AEUB predictably triggered widespread protest from opposition political parties and environmentalists. Not so predictable was criticism by the Calgary- based Alberta oil industry -- especially since Premier Klein is acutely attuned to the views of the Calgary-based Alberta oil industry and it's most improbable that he would have appointed Kowalski to head the new Provincial oil and gas "regulatory" super agency without first seeking and obtaining oil industry approval of the appointment. Oil industry criticism of the appointment was therefore likely an integral part of Kowalski's carefully orchestrated political assassination specifically intended to undercut Kowalski's considerable political support among Conservative back-benchers who predictably would be little inclined to challenge the views of the powerful Calgary-based oil industry.

Normally publicity-shy oil industry spokesmen came out of the woodwork and publicly charged that Kowalski's appointment threatened the ERCB's "worldwide reputation...(for)...competent and impartial regulation of the Province's energy resources". Phooey. That's a self-serving deception carefully fashioned and maintained by the Alberta government and the Calgary-based oil industry about an agency which essentially provides a facade of regulation and public sanction for just about anything the oil industry wants to do in Alberta. Before Kowalski's appointment was cynically used to discredit and knock him off politically the person considered to have an inside track on the job was man named Sherrold Moore. Mr. Moore is a close associate of Premier Klein, a bag man for the ruling Provincial Conservative Party and an ex-senior vice president of Amoco Canada Petroleum Company -- which is a wholly owned subsidiary of a major, multi-national oil company headquartered in Chicago called Amoco Corporation. At last notice Mr. Moore was still a member of the Amoco Board of Directors. The possibility of Mr. Moore's equally questionable appointment wasn't criticized by the Calgary-based oil industry but was heralded as being in the fine tradition of the supposedly "independent, non-partisan, quasi-judicial ERCB".

The Lubicons of course knew about all of these cosy relationships in advance and therefore didn't expect a fair and impartial hearing before the ERCB. What they did hope to achieve was full public disclosure of Unocal's slick dealing and vetting of the issues -- something which they only partially achieved due to a notable lack of media coverage. The concluding remarks of those attending the hearing made clear that they were not deceived by Unocal's elaborate efforts to convince people that Unocal had not deliberately misled the Lubicons. Unfortunately those not attending the hearing missed Unocal's enlightening explanation of why Unocal officials didn't mention sour gas in any of the written materials they gave the Lubicons because they were supposedly relying upon predictably disputed verbal communications. (One would have thought mention of sour gas would have snuck into the written materials at least once -- if only by accident.)

Why the media didn't cover the hearing is an interesting question. It was not for lack of interest on the part of the working press -- several of whom specifically asked to cover the hearing and were not allowed to do so.

The media situation in Alberta, historically always problematic, has taken an even more disturbing turn since the election of the media- wise Klein government. And not only with regard to coverage of the Lubicon issue but with regard to news coverage in Alberta generally - - the masterful job of publicly setting-up and discrediting the high- flying Kowalski in a brief ten day flurry of obviously planted media stories being only one case in point. Reporters sympathetic to the Provincial government are regularly fed pre-digested "inside" information which they use to promote both the government's agenda and their own careers. Reporters who've historically covered the Lubicon issue have been squeezed out, transferred to other beats or variously censored. The Calgary Herald, which in the past has provided good coverage of the Lubicon issue despite continuing howls of protest from powerful Calgary interests, has now made a policy decision not to cover anything north of a town in central Alberta called Red Deer -- even when the story involves a generic environmental issue like sour gas and a major Calgary-based company like Unocal. Taken together these things have resulted in a situation where reporters in Alberta essentially serving as conduits for government propaganda get the vast majority of newspaper space and air time -- to the point where almost nothing else is covered (and anything else which is covered is effectively buried and its significance lost or at least obscured.)

The ERCB hearing lasted 10 ten days over a three week period in November and December and was the scene of almost continuous high drama. A number of prominent personalities made submissions and gave evidence. Unocal was charged with defrauding and deceiving not only the Lubicons but also the ERCB.

Tension was high and sparks flew from the first day of the hearing when Unocal unsuccessfully tried to disqualify all intervenors but the Lubicons to the last day of the hearing when Unocal lawyer Brian O'Ferrell -- who is coincidentally a law partner of ex-Alberta Provincial Premier Peter Lougheed -- threatened that an adverse ERCB decision would "negatively affect the way Unocal views Alberta as a place to invest". The reaction of those attending the hearing to the evidence presented and to Unocal tactics at the hearing was made crystal clear during the last day of the hearing when speaker after speaker indicated that the more they saw and heard from Unocal the more they believed Lubicon charges of duplicity, deceit, fraud and deception.

The President of Unocal Canada Fritz Perschon attended the hearing throughout glad-handing anybody who'd listen to him -- very much like an eternally optimistic and endlessly persistent shoe salesman trying to sell "one size fits everybody" shoes to increasingly dubious customers. Mr. Perschon was supported by several other senior Unocal officials, an ex-senior Provincial government native affairs official hired by Unocal on contract, current senior Provincial government native affairs officials backing up Unocal lawyers and the ex-senior Provincial government official hired by Unocal on contract, an ex- Provincial government wildlife officer hired by Unocal on contract and representatives of a so-called environmental consulting firm hired by Unocal which is coincidentally partners with the Provincial government in a controversial toxic waste disposal plant where the Province guarantees the company a profit costing $25 million a year in public funds. (If there seems to be an inordinate amount of overlap between Unocal and the Alberta government it's because there's an inordinate amount of overlap between Unocal and the Alberta government. To paraphrase a comment made by satirist Lenny Bruce about the forces of good and evil in Chicago, in most places there's continual tension between the private and public sectors; in Alberta, it's nice, the oil companies and the Provincial government all get along and you can't tell the difference.)

The Lubicons including Chief Ominayak and his Council also attended the hearing throughout. They were supported by a variety of local, Provincial, national and international environmental organizations; by Indian Nations and organizations; by organized labour; by human rights organizations; by civil rights organizations; by aboriginal rights organizations; by church representatives; by concerned individuals; by the Lubicon Settlement Commission of Review and by both Provincial opposition political parties.

Regarding Lubicon charges of fraud the ERCB concluded that there "was a misunderstanding between the parties in the discussion of this project prior to the issuance of the plant approval". That wasn't the evidence. The Lubicon evidence was that Unocal did not tell them about plans to build a sour gas processing plant. Unocal evidence was that Unocal did tell the Lubicons about plans to build a sour gas processing plant. That was the evidence. One party or the other is lying. There is no basis for a conclusion of "misunderstanding" based on the evidence.

The ERCB decision goes on to say "While there is some onus on the applicant (Unocal) to present the proposed development in a fair way there is also an obligation on the affected parties (the Lubicons) to make efforts to understand the implications of a project". It says "It is not evident that such efforts were made by the Lubicons in securing advice from those that may be in a position to provide it". The decision does not say how one exercises one's responsibility to "understand the implications of a project" which one has no way of knowing is being planned. Moreover the evidence is that the Lubicons did in fact seek advise "from those that may be in a position to provide it" immediately upon learning from others that Unocal was planning to build a sour gas processing plant -- they just weren't interested in hearing the views of people bought and paid for by Unocal to try and convince them that sour gas is good for children and other living things.

On the question of whether the Lubicons retain unceded aboriginal land rights over traditional Lubicon territory, and consequently whether the ERCB as an agency of the Alberta Provincial government legally had the right to approve construction of a sour gas processing plant on unceded Lubicon territory, the ERCB concluded both that "the Board...has no authority to enter into such issues" (as aboriginal land rights) and also that "The Board believes it has full statutory authority to regulate energy related activities on this disputed land and holds the view that the mineral and land surface leases were properly obtained by Unocal from the (Provincial) Crown". You can't have it both ways. By proclaiming that it has "full statutory authority to regulate energy related activities on this disputed land and...that the mineral and land surface leases were properly obtained by Unocal from the (Provincial) Crown", the ERCB -- a Provincial government "regulatory" agency which clearly "has no authority to enter into such issues" under Canadian law -- is effectively denying the existence of Lubicon land rights over the unceded traditional Lubicon territory and is forcibly asserting Provincial government jurisdiction over "this disputed land". (The question of course again becomes one of effective redress given that Lubicon experience with the Canadian courts is no different than Lubicon experience with the ERCB; i.e., judges who are ex-head oil company lawyers, judges who are ex-partners of head oil company lawyers on the case, judges who retire from the bench and are appointed to oil company boards and so on.)

Going beyond the issue of the Unocal sour gas processing plant the ERCB also decided to cancel a "notification agreement" negotiated between the Lubicons and the ERCB in 1986 after several serious disputes -- one of which involved Unocal. At that time the ERCB was taking the position that aboriginal land rights weren't an interest they needed to take into account. The Lubicons threatened to tie up ERCB approvals by taking the ERCB to court over interpretation of its very general mandate. In this context the ERCB agreed to ask companies to check with the Lubicons before making application to the ERCB and to hopefully obtain Lubicon agreement not to oppose an application to the ERCB.

The primary purpose of the 1986 "notification" agreement between the Lubicons and the ERCB was to protect particularly sensitive sites like burial grounds from resource exploitation activity. As long as the proposed project didn't threaten such a sensitive site, and the company agreed to respect Lubicon wildlife and environmental concerns, the Lubicons typically agreed not to oppose an application by the company to the ERCB for approval of the project.

It was in the context of this "notification agreement" with the ERCB that Unocal first contacted the Lubicons to discuss expansion of their existing battery station. In retrospect it's clear that Unocal knew the Lubicons would never in hell agree to construction of a sour gas plant adjacent to the area where the Lubicons have been planning for over 50 years to establish their reserve. So Unocal officials misrepresented their plans to the Lubicons and deliberately created an ambiguous paper trail enabling them to tell the Lubicons that they were talking about expanding an existing oil battery station and to tell the ERCB that the Lubicons had agreed not to oppose a sour gas processing plant. (Unocal officials undoubtedly believed that they could build their sour gas plant at the site of the existing battery station and the Lubicons would be none the wiser. They might have pulled it off too had others with knowledge of their plans to build a sour gas processing plant not alerted the Lubicons.)

After Unocal got caught trying to slip their sour gas processing plant past the Lubicons they first tried to argue that they didn't need to obtain Lubicon agreement not to oppose their application to the ERCB because, they said, their plant was located outside of the 95 square mile proposed reserve area around Lubicon Lake and was therefore supposedly outside of the so-called ERCB "notification area". They knew better and were bluffing -- as is made clear from their original letter to the Lubicons on this matter which states explicitly "We have been advised by the Energy Resources Conservation Board that the consent of the Lubicon Lake Nation must be obtained in support of the referenced plant expansion". It was just that denying that they were required to consult with the Lubicons was the best they could do when they were first charged with not consulting the Lubicons. (It's also a typical Unocal bully boy tactic when challenged or questioned about anything.)

Told that their sour gas plant was well within a much larger 900 square mile ERCB "notification area" Unocal officials reacted indignantly that the "notification area" shouldn't be any bigger than the 95 square mile proposed reserve area. They then carried this argument into the hearing asking that the "notification area" be unilaterally defined by the ERCB to include only the 95 square mile proposed reserve area because, according to Unocal, the original agreement provided for a larger area only because nobody knew in 1986 how big an eventual Lubicon reserve would be or where it would be located. The ERCB adopted this Unocal argument holus-bolus and unilaterally redefined the so-called "notification area" as demanded by Unocal despite the fact that the original agreement had nothing at all to do with an eventual reserve area but rather with protecting particularly sensitive sites scattered throughout the traditional Lubicon territory like 19 burial grounds. (Redefining the "notification area" likely serves a bigger oil company/ERCB/AEUB/Provincial government purpose as well. Natural gas has become the fuel of choice for the huge U.S. utilities. It has therefore become an attractive natural resource to exploit -- after oil in the late 70s and timber in the mid-80s. There is apparently abundant natural gas in the unceded Lubicon territory. The natural gas in the immediate vicinity of Lubicon Lake is apparently sour gas. It's clear that the Lubicons will oppose a proliferation of sour gas plants ringing the area where they raise their children. By re- defining the size of the "notification area" the oil companies/ERCB/AEUB/Provincial government are largely relieving themselves of the negotiated requirement to give the Lubicons advance notice of their plans to exploit the sour gas resources in the immediate vicinity of Lubicon Lake. Needless to say effectively pushing things back to before the hard-won 1986 "notification agreement" -- especially at a time when it appears that the oil companies are gearing-up for another massive and particularly worrisome run at Lubicon natural resources -- doesn't bode well for the embattled and already seriously damaged Lubicon society.)

Regarding the impact of resource exploitation activity upon the traditional Lubicon society and way of life the ERCB decision says "The Board recognized there has been some social impacts brought about by industry, but it must also be cognizant of its responsibility to regulate the energy industry in the overall provincial public interest". What we're of course taking about here is a euphemistic way of referring to destruction of the traditional Lubicon economy and way of life resulting in what many knowledgable independent observers have concluded is genocide of the Lubicon people in the name of oil company profits and related Provincial government royalty payments.

The ERCB decision says "The Board concluded that the plant would have no undue impact on the people or the environment of the area" -- primarily because the plant has been built "adjacent to an existing oil battery site" and consequently would not disrupt anything that hasn't already been disrupted. This is an argument which the Lubicons have been hearing from the Provincial government and the oil companies for years. Basically the way the argument goes is don't worry about this project -- it's small and won't disturb very much. The argument for the next project is then that the area has already been disturbed by the first project and so on. Often the individual projects do seem relatively innocuous in the context of the relatively vast traditional Lubicon territory. However the cumulative impact of all of these projects has been devastating upon the traditional Lubicon economy and way of life to the point where the very survival of the Lubicon people as a distinct society is now seriously imperiled.

The ERCB decision says "The Board believes that considerable economic benefit could be gained and the social structure of the band stabilized if a measure of co-existence could be mediated" -- whatever the hell that means. All of the available evidence is that massive resource exploitation activity in the unceded traditional Lubicon territory is in fact tearing Lubicon society to pieces. At best the Unocal plant is expected to produce only one or perhaps two technical jobs -- neither of which any Lubicon would likely qualify for even if one were interested in working at a plant considered by most Lubicons to represent a deadly threat to the health and well- being of their children. As for a "so-called measure of co-existence being mediated" -- well that's what the notification agreement which the ERCB has now effectively cancelled was all about.

On the question of Lubicon health and environmental concerns the ERCB essentially discounts the evidence of the Lubicons and others living in the vicinity of existing sour gas plants as unscientific, undocumented and unsubstantiated choosing instead to rely on the self-serving charts, graphs and statistics produced by an environmental consulting firm hired by Unocal called Bovar-Concord. The ERCB decision describes Bovar-Concord stuff as "compelling evidence that this sour gas plant is no threat to any community". The Board makes no mention or comment about the well known fact that Bovar-Concord is a division of company called Bovar Inc., or that Bovar Inc. is a partner of the Alberta provincial government in ownership of a highly controversial toxic waste disposal plant, or that Bovar Inc. has a sweetheart deal with the Alberta Provincial government which guarantees it a profit on a plant which has lost money every year since its construction, or that this sweetheart deal between Bovar Inc. and the Alberta government has cost Alberta taxpayers $250 million in construction and operating costs since 1987, or that this sweetheart deal between Bovar Inc. and the Alberta government is currently costing $25 million a year in public funds, or that it is estimated that this sweetheart deal between Bovar Inc. and the Alberta government will cost Alberta taxpayers $800 million by the year 2008, or that the ubiquitous ex-Alberta Premier Peter Lougheed is a consultant to Bovar Inc., or that all of these relationships and vast sums of money raise a very real question about whether Bovar-Concord's shiny charts should be given more weight and credibility than the evidence of an otherwise disinterested Alberta dairy farmer whose cattle have sickened, died, had spontaneous abortions, delivered calves with birth defects and so on since construction of a sour gas processing plant in his area.

During the ERCB hearing, and as a result of the controversy generated by the hearing, a Catholic religious order with shares in Unocal called the School Sisters of St. Francis became concerned about Unocal's sour gas processing plant at Lubicon Lake and attempted to have a resolution asking Unocal management for information on the situation included on the agenda of Unocal's Annual Shareholders Meeting. Unocal management responded by asking for a meeting with the School Sisters to try and talk the School Sisters out of pursuing the matter at Unocal's AGM. The School Sisters agreed to a meeting but only if representatives of the Lubicons could also be involved. After some discussion a meeting was agreed in Little Buffalo on January 21st. Notes on that meeting are attached and are recommended reading for anyone seeking to understand the dispute between Unocal and the Lubicons.

After Sister Laurie Michelowski of the School Sisters of St. Francis left Chicago on her way to Little Buffalo for the January 21st meeting Unocal management challenged the School Sisters resolution with the Securities and Exchange Commission. Sister Michelowski was not informed about the Unocal challenge until after the January 21st meeting. Normally such meetings are held to discuss proposed resolutions and the School Sisters don't agree to meet if a challenge has already been filed. Typical Unocal tactics.

The School Sisters subsequently successfully argued their resolution with the Securities Exchange Commission and won the right to have it included on the proxy statement provided to all Unocal shareholders. Unocal responded by moving the AGM from Los Angeles where concerned environmental groups were gearing-up to lobby Unocal shareholders to Houston, Texas, where there are fewer environmentalists to worry about.

In a replay of rushing construction of the plant to completion before the ERCB hearing, Unocal put its new sour gas processing plant at Lubicon Lake into operation in mid-April -- effectively preempting prior shareholder consideration of the matter. Putting the plant into operation was accompanied by a show of force by the RCMP in the Lubicon area presumably intended to let Lubicon parents know that there's nothing they can do to protect their children from the feared consequences of Unocal's sour gas processing plant. How the Lubicons will respond to this RCMP-delivered message and the fact that the plant has now been put into operation isn't yet known.

The Unocal AGM is scheduled for Houston on May 22nd. Letters sent to the Alberta Provincial government protesting the ERCB decision will only elicit a form response indicating that the AEUB/ERCB is "an independent, quasi-judicial body" and that it would therefore be "inappropriate for the Alberta Government to attempt to interfere with the recent decision of the AEUB to approve the Unocal plant". Letters to Unocal protesting operation of the plant will only elicit a form response summarizing the ERCB decision and expressing willingness to work with the Lubicons "if allowed to do so by Chief Ominayak". Concerned people should therefore write to the School Sisters of St. Francis letting them know that people across Canada and around the world oppose the operation of Unocal's sour gas processing plant at its current location, are monitoring the situation, are monitoring how Unocal shareholders respond to the situation and are prepared to participate in a boycott of Unocal products if the Unocal sour gas processing plant at Lubicon Lake isn't shut down.

Having Unocal shareholders decide that operation of the Unocal sour gas processing plant at Lubicon Lake is a bad idea is the easy way to do it. If Unocal shuts down the plant other oil companies will think twice about moving into the controversial Lubicon territory at least over Lubicon objections this fall. If the Unocal sour gas processing plant at Lubicon Lake continues to operate over Lubicon protests it's likely that the other oil companies will conclude that they can basically do what they please in the Lubicon territory without concern for adverse Lubicon reaction.

The mailing address for the School Sisters of St. Francis is:

Sister Laurie Michalowski, SSSF

Chair, SSSF Corporate Responsibility Committee

4127 N. Central Park

Chicago, Illinois USA 60618

Fax: 312-463-6806

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ERCB February 23, 1995 News Release and Executive Summary

Miscellaneous newspaper articles on Ken Kowalski

November 11, 1994, letter from the SSSF to Unocal enclosing Shareholders Resolution

January 21, 1995, Unocal/SSSF/Lubicon meeting minutes

February 26, 1995, Edmonton Journal article entitled "Sour gas plant cleared for start-up near Little Buffalo"

March 26, 1995, Edmonton Journal article entitled "Lubicon, Catholic order force debate on start-up of Unocal sour gas plant"

Transcript of March 29, 1995, CBC Radio interview with Sister Laurie Michalowski, SSSF

April 19, 1995, Edmonton Journal article entitled "Lubicon-opposed plant runs"

Sample letters from Lubicon supporters to the SSSF