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Frog Lake Energy Resource Corporation (FLERC)

Frog Lake Energy Resource Corporation (FLERC)

Energy and Sustainability Come Together For Frog Lake First Nation

By Cheryl Long

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with more than four billion barrels of oil estimated to be in the ground, the Frog Lake Energy Resource Corporation (FLERC) in Calgary, Alberta is looking at a future brimming with potential growth. Championed by CEO Joe Dion, the successful oil and gas exploration and production company is unique for several reasons, one being the fact that it is wholly owned by the Frog Lake First Nation, making it the first oil company to be owned by Canada’s First Nation people.

It’s no surprise that FLERC’s success is deeply intertwined with that of the Frog Lake Reserve, a Cree community located about 200 kilometres east of Edmonton. The goal is to see Frog Lake and its approximately 3,000 band members become self-sustaining as a nation, whether that’s through future increases in oil prices as the industry rebounds or by diversifying into other energy sources, Dion said.

“We want to keep growing, and grow into other sectors. Oil is our big source … we intend to go into cogeneration, wind power and potentially solar as well,” he explained.

Their vision statement sums it up nicely, highlighting a goal to “create sustainable wealth” such that “by 2020 we will be recognized for our ability to continuously create business opportunities and deliver long-term value for the benefit of the Frog Lake First Nation and its partners.”

Cogeneration plant purchased for $35 million

In fact, this spring Calgary-based Pengrowth Energy Corp. sold its cogeneration plant in northeastern Alberta to FLERC for $35 million, which then leased the plant back to Pengrowth as part of a 20-year agreement. The unique partnership will see the plant continue to be operated by Pengrowth and allow FLERC to diversify its revenues by tapping into another energy source. The plant, located just a few kilometres west of the reserve, produces steam for thermal wells and power that’s used by the plant and sold on the provincial grid.

FLERC has come a long way since its inception in 2000. Launched with no assets, production, cash flow or staff, the fledgling organization found its path to success by partnering with companies coming on to the reserve for oil exploration. By forming joint ventures, acquiring mineral leases and other assets, and using its own internal cash flow to fund operations, FLERC was able to develop an aggressive drilling program that ensured the Frog Lake First Nation had a hand in all projects carried out on the reserve.

Part of the company’s growth can be attributed to the integration of the “Teepee Principles” into all aspects of the business, fostering a commitment to core values and a work/life culture that benefits employees, the community and the company’s stakeholders. Values such as respect, hope, humility, kinship, sharing and thankfulness help to balance the demands of a highly competitive and volatile industry.

In partnership with six companies

Today, FLERC maintains partnerships with five companies on the reserve and one, Pengrowth, located off the reserve. More than 600 wells have been drilled, and they continue to drill new wells using increasingly advanced technology. “We get more oil out of the ground with every well we drill,” Dion said. Over the years, the corporation’s oil production has peaked at more than 3,500 barrels of oil per day. Though declining oil prices have dropped production down to about 1,000 barrels daily, Dion expects to triple those numbers “in the next year or so”.

FLERC maintains a non-operating role within each project, sharing in profits that benefit the people of Frog Lake First Nation by helping to build houses and improve the standard of living within the community. The corporation also helps to provide jobs to members of the reserve.

“It’s been a real boon for the nation as far as jobs,” Dion said. “We’ve had layoffs like everyone else but the folks are resilient and we haven’t laid off much staff from our company because we’ve been lean; we have a small office, small staff and low overhead.”

Another company owned by Frog Lake First Nation — and providing career opportunities for its community members — is Frog Lake Oilfield Services, which works on behalf of FLERC conducting onsite production management. By allocating jobs to the nation’s youth, the company supports local sustainable development. Their services include new well set-ups, sewer and water line thawing, fencing and oilfield maintenance. In addition, they provide employment to First Nations communities outside of Frog Lake.

Eager to move oil to tidewater

Oil remains key to FLERC’s growth and the continued goal towards self-sustainability for the Frog Lake First Nation. As prices bounce back, Dion hopes to see production double and even triple — “it would be nice to get to 6,000 barrels a day,” he said. New technology will continue to fuel expansion in the oil sector, and there is a continued push to export. FLERC is involved in talks with the top 10 First Nations oil producers in Canada in an effort to get landlocked oil to tidewater, Dion said. By transporting oil via pipeline to ocean ports, or “tidewater” as they’re known in the industry, Canadian oil producers could export the commodity and see their market and revenue potential expand considerably.

“Right now Alberta needs to get oil to tidewater,” Dion said. “We can’t count on the U.S. as the only market. We’re pushing to get these pipelines built to get jobs created.”

This year, oil-producing First Nations approached the Canadian federal government with a national energy strategy designed to move natural resources, particularly oil, to tidewater. A key part of the treaty would ensure First Nations’ ownership of pipelines and terminals, providing revenue from increased oil production and sales for the benefit of First Nations people across the country.

In the meantime, FLERC continues to look at opportunities to develop alternative energy sources, diving deeper into cogeneration, considering wind power projects and looking into solar power as another avenue to pursue down the road.

www.flerc.com