Opposition from Aboriginal groups could delay LNG projects in
Canada's British Columbia
Vancouver (Platts)--16Apr2015/516 am EDT/916 GMT
Planned LNG projects in Canada's British Columbia could face delays
and major cost overruns unless a "concerted" effort is made by
developers to win over support of Aboriginal groups in the province,
industry officials said Wednesday.
"With some 203 First Nations groups, BC [British Columbia] is primarily
Indian land and we control the resources and also have rights guaranteed
by the [Canadian] constitution," Stewart Phillip, president of the Union
of BC Indian Chiefs said at the 3rd Annual Canadian LNG Exports
Conference in Vancouver.
Developers of LNG facilities will need to understand that and respect
the rights of Aboriginals or else face court cases or demonstrations, he
said.
"Foreign corporations come to BC, talk to the premier [Christy Clark]
and cut a deal. But they have duties to consult Aboriginals and related
stakeholders that they do not take seriously. They are talking to the
wrong people," he said.
"The land we have should not be used by companies to extract
resources and make money. The jury is still out for the development of
LNG facilities in BC and we feel it will be a fading opportunity unless
they consult us," Phillip said.
Due to lack of a treaty between the Canadian government and First
Nations bands, development of oil and gas projects in the province has
become a stumbling block with nearly 50 Aboriginal groups -- including
the Yinka Dene Alliance, the Wet'suwet'en and the Saik'uz bands --
opposing Enbridge's Northern Gateway crude oil pipeline since 2010.
The 731-mile, 525,000 b/d pipeline will run from Alberta to Kitimat in
British Columbia and open up a much touted export route for Canadian
crude to Asia.
Phillip's statement came in the wake of Calgary-based Progress Energy
stating last week that it was facing a 40% cost escalation of a gas
feedstock pipeline for its LNG project in British Columbia following
severe opposition from the Gitxsan First Nations group.
The pipeline is estimated to cost C$5 billion ($4.2 billion) and is
designed to deliver 2 Bcf/day to 3.6 Bcf/d of gas.
Petronas, which owns 100% of Progress, said late March it will take a
final investment decision for its Canadian LNG facility of capacity 19.7
million mt/year.
An FID may be a "big deal" for a developer, but for a First Nations
band a "bigger deal" will be the respect of their rights and title to
the lands, Phillip said.
STEELHEAD FINDS WAY OUT
"Any community that is in the vicinity of a project development area
will be impacted, but developers will need to take steps to reduce risk
and add value to their mega investments," Nigel Kuzemko, CEO of
Steelhead LNG said at the event, noting structuring LNG projects are
"complicated and there are ways of ensuring First Nations'
participation."
His company, which is currently carrying out an environmental assessment
for a 24 million mt/year LNG facility to be built in the province,
signed last summer an opportunity development agreement with the
Huu-ay-aht First Nations band.
"We are working closely with them [Steelhead] to develop the project to
be built over our lands," John Jack, a councillor for Huu-ay-aht said.
With a population of some 700 people, the band has control over 8,000
hectares on the Vancouver Island, including Sarita Bay, where four LNG
liquefaction trains will be built by Steelhead, Jack said.
Steelhead plans to build the facility in two phases, each of 12 million
mt/year, with first LNG being produced in 2022, Kuzemko said.
Steelhead has set up a five-member project development panel for the
planned facility, Jack said, that includes two nominees from his band.
A successful collaborative deal with a First Nations band will come a
long way in ensuring an LNG project is built on time and within budget,
Kuzemko said.
But a challenge to be dealt with is the log-lead time it will take to
finalize an investment decision.
"We are three-to-four years away from FID. But our deal with the
Huu-ay-aht group has put us on a solid foundation," he said.
--Ashok Dutta, newsdesk@platts.com
--Edited by Haripriya Banerjee,
haripriya.banerjee@platts.com
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