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Onion Lake First Nation receives approval to expand territory

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ONION LAKE, Saskatchewan - Onion Lake is set to almost triple its land size and continue towards becoming the largest contiguous reserve in Saskatchewan. The expansion has the potential of generating tens of millions of dollars in annual revenue for its residents.

Band members voted their overwhelming approval on Jan. 22 towards the purchase and future use of an additional 108,000 acres. Of 1,162 votes cast (out of an eligible 1,952 residents), 1,144 were in favor of how the band will deal with forest and mineral leases and the exploration of un-disposed minerals on the reserve.

Leading Onion Lake's negotiating team is Joe Carter, the band's director of Lands, Trust and Development since 1996. He says the clear majority paved the way for the acquisition of this land.

"We know our community well enough to place the trust in the people for them to understand the complexity in this referendum," said Carter.

In 1994, Onion Lake (180 miles west of Saskatoon) was awarded a $29 million (Cdn.) settlement by the Saskatchewan government. Based on a 19th-century treaty, the band had 26,000 acres confiscated while equity payments during the past 120 years resulted in money for the purchase of an additional 82,000 acres. More than half the land that will be purchased has untapped oil and gas potential.

"There's no guarantee of what governments will be doing and this purchase will secure the future of unborn children into perpetuity," said Carter about the band's decision to use the settlement money to buy this land as opposed to using the dollars elsewhere.

While the plebiscite results will allow the band to move forward, Carter believes the entire process had been delayed by several years because of third-party interests. The province continued to issue annual permits to grazers and outfitters, the last of which expired at the end of 2002.

For $200 per year, licenses were granted to half a dozen deer and bear hunters. Eventually the band bought out the permits for $150,000 each. There were another two grazing permits that were purchased for a combined $1 million.

"The last one (permit holder) was almost forced to settle because the government proposed to terminate the permit. That's what they should have been doing all along," said Carter.

However, according to the province, it was fulfilling the guidelines as signed in the 1992 treaty land entitlement framework agreement between Saskatchewan, the federal government and 26 entitlement bands. To be eligible to purchase Crown (public) land, a band had to apply to the province and if the area was available, the land would be held for 18 months, under which all existing third party interests would be honored.

Nancy Cherney, manager of Program Development for Sustainable Land Management branch of Saskatchewan Environment said because band commitments prior to acquiring the land, such as road developments, had not been completed, consecutive 18-month periods continued to elapse. Cherney also stated the province was active in persuading third parties to conduct negotiations in good faith.

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"Because this took longer than (the original) 18 months, the band had to continue to ask if this land was for sale and the province continued to hold the land for (consecutive) 18-month periods. During all those freeze periods, we have not been granting any new occupant interests during the times when the land was being held for the First Nation," said Cherney.

Despite the hassles involved in obtaining this additional acreage, the economic opportunities this area holds are substantial. Of the $7 million needed to purchase these acres, forestry and revenues from oil and gas will easily bring the band returns on its investment.

The band will continue contracts where companies are already extracting oil and gas from the land, but only in zones where drilling has occurred. Any new developments will become Onion Lake's property.

Onion Lake has taken some bold steps toward improving cash flow. Indian Oil and Gas Canada (IOGC and the band, under the name of Onion Lake Energy, will avoid a federal bureaucracy by dealing with the oil companies themselves. With direct contact in the joint venture agreements (JVA), money will go straight to the band with only the minimal required payments going to IOGC, Carter said.

Inevitably, what Carter sees, is oil companies having quiet possession of the land under strict and regimented three and four-year leases with mandatory production. This overrides the current system that had IOGC collecting revenues for many years without filtering them back to the individual reserves.

"Because of our knowledge of the land, we know what's here but IOGC, because it's federal, marches to their own beat and works on their own time," said Carter. "There are a number of wells on reserves (across western Canada) but there's nothing (no money) on reserves because IOGC hasn't done a whole lot to get production going."

The purpose of IOGC, according to its director of policy, is to ensure money is collected on behalf of the entire band. John Dempsey says fair value of the resources, with royalties ranging between six percent for heavy crude and up to 30 percent for gas, is eventually distributed back to the band's population. He added IOGC allows these joint venture agreements to occur but the board still has a fiduciary responsible for the entire reserve, not just the band's council.

"We take the money and deposit it in Ottawa in the band's name but the removal of the money is part of the Indian Act which we have no jurisdiction," said Dempsey about how sometimes monies may be slower to reach the band level.

Meanwhile, there are plans by Onion Lake Energy toward the option of buying up to a 50 percent interest on every operating well on the purchased lands and within three months choosing partners to develop oil. This economical aggressiveness could become a venture ranging well over a billion dollars, especially if, as Carter mentioned, Onion Lake Energy offers stock to the public within six months.

Although any visions of Onion Lake becoming a significant player in oil production would be up to a decade away, Carter believes the foundation is already established because of how the band is actively pursuing economic self-determination.

"We are prepared to assume the risks and we have sophisticated processes to enable us to determine what resources lie within the land and be able to make informed decisions."