British Columbia

Lax Kw'alaams Band reject $1B LNG deal near Prince Rupert

A natural gas benefit offer worth more than $1 billion has been rejected by a First Nation on B.C.'s northwest coast, but not everyone thinks it will necessarily scuttle the project.

Experts say the project could still go ahead without the First Nation's consent

Lelu Island, near Prince Rupert, BC, is the proposed site of the Pacific Northwest LNG project, backed by the Malaysian energy company Petronas. (Robin Rowland/Canadian Press)

A natural gas benefit offer worth more than $1 billion has been rejected by a First Nation on B.C.'s northwest coast, but not everyone thinks it will necessarily scuttle the project.

Pacific NorthWest LNG was proposing to build a pipeline and terminal in the Lax Kw'alaams Band territory just south of Prince Rupert.

Band members were asked to vote on a $1.15 billion offer over 40 years in exchange for their consent for the project.

The vote in Vancouver on Tuesday was the third in a series conducted by the First Nation that rejected the project.

Elya White said she was one of about a dozen members at the meeting in Vancouver that voted for the project to go ahead or did not vote against it.

"You know, I was terrified to give my answer. But, it's my vote, it's my decision, my vote counts. And it's a yes," said White.

"I have a forestry diploma and I understand working with First Nations people gets complicated with environmental issues. I also know all the regulations they have to go through to be approved to the environmental approval."

Premier Christy Clark said yesterday that she believes it is only a matter of time until a negotiated agreement is reached with the 3,700 member band.

Clark insisted the possible rejection of the liquefied-natural-gas terminal is nothing more than a bump in the road for a multi billion-dollar pipeline project.

Environmental concerns

Pacific NorthWest LNG wants to transport natural gas from the northeast corner of the province to an export facility on Lelu Island, just south of Prince Rupert.

Band members have raised concerns over the project's environmental impact, because of the site's location at the head of the Skeena River and the threat it poses to the watershed.

The band's primary concern relates to the project's potential impact on Flora Bank, an underwater area immediately adjacent Lelu Island where an abundance of eel grass provides vital habitat to maturing salmon in the Skeena watershed.

Pacific NorthWest LNG responded to concerns by proposing to build a 1.7-kilometre suspension bridge that would bypass the sensitive underwater ecosystem. The span would be anchored by a pair of support towers, one planted on the edge of Lelu Island and the other just outside Flora Bank.

A trestle would then carry the pipeline the remainder of the nearly three kilometres to LNG carriers waiting at a deep-water berth.

The company recently submitted additional documents requested by the Department of Fisheries and Oceans related to the updated infrastructure proposal.

Project could still go ahead

Observer and energy lawyer David Austin, who is with the firm Clark Wilson, said Tuesday before the vote that the band's rejection wouldn't necessarily scuttle the project.

Lelu Island is Crown land managed by the Prince Rupert Port Authority, which means the province technically has the authority to push ahead without support from the Lax Kw'allams.

Even if the band proves it has aboriginal title — which would require proving it has had exclusive occupancy of the territory — Supreme Court precedent gives the province the right to override that claim.

"From a legal perspective it would be very complicated to proceed with the LNG terminal without [First Nation] support," said Austin. "But if the circumstances were right not impossible."

The length of time required to sort out the legal uncertainty resulting from a lack of First Nations support might encourage LNG developers to go elsewhere with their investments, he added.

The B.C. government said it has reached 54 pipeline-benefits agreements with 28 First Nations across the province. Of the 59 First Nations along the natural-gas pipeline ending at Lelu Island only five have publicly announced signing agreements with the government.

With files from the Canadian Press and the CBC's Wil Fundal