Flying Dust soars with oil industry partnership

By Tim Banman

13-1 Flying Dust signing photo

Former Flying Dust chief Jim Norman signs the agreement in 2011 with Kim Wallace and Keith Hemke of Braveheart Oil and Gas Ltd. PHOTO COURTESY: MEADOW LAKE NORTHERN PRIDE.

In the 2008-2009 Bakken play land rush driven by the breakthrough in technology, Flying Dust First Nation and Braveheart Oil and Gas Ltd. went out looking for success and found it. After years of careful negotiations and hard work, the partnership between the First Nation and private industry gained four parcels of prime resource real estate totalling 1,440 acres in southeast Saskatchewan and successfully converted the land to reserve status for the future economic prosperity of Flying Dust.

Now, Flying Dust is poised to reap the benefits from years of laying the groundwork, with drilling expected to start this season. The four First Nations commercial islands were long in the making, but the foresight of former and present chief and councils will benefit Flying Dust First Nation for generations to come.

“It’s been about a seven- to eight-year process that’s finally coming to fruition,” Flying Dust First Nation Chief Bob Merasty reflects. “It’s something that’s very positive for our First Nations in terms of generating revenue. Corporate business development is the big focus for our community.”

Flying Dust, through its corporate entity FDB Holdings Inc., has established a number of new business ventures including the recent acquisition of a gas station in December 2013, a new gravel operation, a market garden and FDB Farms, which has been in operation for 50 years. The venture-driven band now has a stake in the oil game with a long-term partnership with industry to tap the recently added lands. Merasty hopes to see royalties from the land fuel further economic and social development goals for his band members.

The southeast Saskatchewan commercial zones, while hundreds of kilometres from the home reserve in the northwest of the province near Meadow Lake, were added to the Flying Dust First Nation’s land base under the federal government’s Additions to Reserves policy. The federal initiative has added 10 per cent to First Nations land since 2006, 339,982 hectares in total, to make up for unfulfilled legal obligations. The Minister of Aboriginal Affairs and Northern Development created Flying Dust’s first southern reserve on June 18, 2013, with three parcels added on September 12.

Flying Dust started inquiring about land acquisition soon after a 1992 Treaty Land Entitlement framework agreement provided the First Nation 33,910 in ‘equity acres’. The process allowed the band to receive undisposed minerals transferred to them at no cost, as well as to acquire lands with a set amount of funding. Flying Dust purchased 11,000 acres of land close to the home reserve, which used two-thirds of the allotted funding for land acquisition. The limited amount of remaining funds placed the band in the position having to find other means of funding to fulfill the TLE agreement.

The band sought and found financial partners with the goal not only to add reserve land, but also to add land that would contribute to the long-term economic development goals of Flying Dust and raise funds for the fulfillment of the remaining TLE claim. The circumstances brought Flying Dust into partnership with Braveheart Oil and Gas Ltd., an Alberta-based company created with First Nations development in mind. Working closely for the same goal, Braveheart and Flying Dust’s leadership persevered through seven years of exploration and negotiations to see the project come to fruition.

“We became true partners,” Darwin Derocher recalls, director of lands and resources for Flying Dust throughout the process.

“I worked under three different chiefs and councils and for the most part, Flying Dust has been focused on achieving this economic development opportunity, but also expanding on that,” Derocher says. “It offers us the opportunity for further economic development down the road.”

After forging the partnership, Braveheart set out to lay the groundwork by exploring Bakken lands near Estevan. Braveheart located undisposed Crown minerals on soldier settlement lands, which presented a unique opportunity for purchasing and eventually converting to reserve status—an opportunity that no longer exists, since the Province of Saskatchewan took over soldier settlement lands from the federal government shortly after Flying Dust’s southern properties achieved reserve status.

Braveheart narrowed its search to 3,000 acres and began working to secure the land and mineral rights in negotiation with farmers, many of whom decided to rent the land back and continue farming. In exchange for providing funding to acquire the surface rights from the farmers, Braveheart retained the exclusive right to drill on the reserves with the band earning royalties on future production. When the dust settled, Flying Dust had bought nine quarter sections.

“It all began with federal Crown mineral rights that existed within the Province of Saskatchewan,” Braveheart director Kim Wallace explains. “We seemed to be at the right place at the right time.”

The process took longer than expected and by the time the land and mineral rights were secured, the leadership at Braveheart neared retirement and decided it would be best to pass the torch to new partners. Although Braveheart’s role has ceded to new ownership, Wallace says Braveheart will continue to provide technical support and advice to Flying Dust to help transition to production.

“In terms of getting the most out of the Bakken, the First Nation is in very good hands now,” Wallace reflects.

Chief Merasty says the band’s focus continues to be on capacity-building, education and training for the band’s members as Flying Dust seizes the opportunity at hand. The agreement specifies that qualified band members have the opportunity to work on the southern reserves, while another benefit for members is matching dollars for education and training. While direct employment and training possibilities for members are one benefit, the larger economic development goals of the band continue to move forward with careful planning. With royalties from drilling expected to impact shortly, the band continues to evaluate its options to fulfill the TLE agreement, and may look at accessing deeper plays where new technology is opening up new areas for oil production.

Considering the band’s model record of financial compliance with funding requirements, Merasty sees potential to work with more partners in the oil industry going forward. “We are certainly keen on new partnerships and exploring mutually beneficial arrangements. There’s a lot of potential there yet. We would make a good business partner for anyone.”

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