B.C. First Nation expects lucrative deal over LNG export plant

An LNG tanker (Mitsubishi Heavy Industries).

VICTORIA — A Vancouver Island First Nation exploring the potential of locating a liquefied natural gas export plant on its treaty lands expects a lucrative future financial offer to be part of the negotiations.

Chief Robert Dennis of the Huu-ay-ayt First Nation near Port Alberni did not specify a financial amount, but said Friday the recent $1.1-billion offer to a northwest B.C. First Nation to support a proposed LNG project near Prince Rupert sets the stage for LNG talks.

Vancouver-based Steelhead LNG is planning to locate two LNG plants on aboriginal lands and is working with the Malahat First Nation, on southern Vancouver Island, and the 750-member Huu-ay-ayt.

"Let's make no bones about it, Petronas has set a bar by offering $1.1 billion to the Lax Kw'alaams (First Nation) community," said Dennis.

Last May, members the Lax Kw'alaams near Prince Rupert, rejected a 40-year benefit deal from developers of the proposed Pacific NorthWest LNG plant at Lelu Island. Malaysian energy giant Petronas is the major backer of the $36 billion project, which has the support of the B.C. government.

Dennis said the Huu-ay-aht nation has been in talks with Steelhead and those negotiations include environmental, cultural and economic issues, but they have yet to include financial offers.

"We are reasonably satisfied with the level of consultation," he said.

Plans to build the two LNG plants on Vancouver Island received federal approval Friday for five export licences.

But Steelhead CEO Nigel Kuzemko said other regulatory hurdles remain and a final investment decision to proceed is up to two years away.

"Now we're at the point where we can say, yes, if we get all other approvals together and we can make the environmental challenges valid and we can understand local community support, then we can have a project that can work, as long as we can make it work financially," he said.

Steelhead's proposed Malahat LNG project near Victoria received approval from the National Energy Board for one licence to export up to six million tonnes of LNG for 25 years.

The proposed floating LNG terminal will be located adjacent to an industrial zoned waterfront site at Saanich inlet about 30 kilometres north of Victoria. The Malahat First Nation purchased the 525-hectare Bamberton site last summer.

The other four export licences apply to the proposed LNG plant on Huu-ay-aht treaty land at Sarita Bay, about 75 kilometres southwest of Port Alberni. The licences approve the export of up to 24 million tonnes of LNG for 25 years.

Kuzemko said the two projects involve connecting Steelhead to existing natural gas pipelines that run from northeastern B.C. to the Lower Mainland. Steelhead then plans to build a new pipeline that connects to gas facilities in Washington state, and then build another pipeline underwater across to Vancouver Island.

Kuzemko said the new pipelines would be about 120 kilometres long. Steelhead also proposes to build a 75-kilometre land pipeline to Sarita Bay from the Malahat site once the Malahat project is in operation, he said.

"It would be one pipeline route that could supply both projects," he said.

Malahat First Nation CEO Lawrence Lewis said the agreement with Steelhead to develop the floating LNG plant near Victoria is a chance to protect aboriginal rights while practising environmental stewardship.

Dirk Meissner, The Canadian Press

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