British Columbia

First Nation 'deeply disappointed' after Steelhead LNG pulls out of Vancouver Island project

A Vancouver Island First Nation says it is "deeply disappointed" that a Vancouver-based liquefied natural gas company has pulled out of a planned LNG development just months after it was announced as a major milestone.

Steelhead CEO says uncertainty around pipeline development behind 'timeout' decision

The Huu-ay-aht Nation purchased the proposed Sarita LNG site on the west coast of Vancouver Island from Western Forest Products in February 2017, paving the way for the Steelhead LNG plan. (Steelhead LNG)

A Vancouver Island First Nation says it is "deeply disappointed" that a liquefied natural gas company has pulled out of a planned development just months after it was announced as a major milestone.

In an open letter, Huu-ay-aht Chief Robert Dennis and hereditary Chief Derek Peters say the First Nation has been notified by Vancouver-based Steelhead LNG that it has "ceased current project work" on the Kwispaa LNG project.

Steelhead LNG and the Huu-ay-aht announced in March 2017 that they would work together to develop the export facility at Sarita Bay on the west coast of Vancouver Island.

"We are calling it a refocusing or a timeout," said Steelhead LNG CEO Nigel Kuzemko. 

Kuzemko said the uncertainty around pipeline development in Canada brings a perceived higher risk with investors than was previously envisioned.

"We made a lot of progress on many fronts to bring the project to fruition [but] the current political regulator and geopolitical environment has created a mood of caution amongst key industry participants and financial markets," he said.

Huu-ay-aht head hereditary Chief Derek Peters (left), chief councillor Robert Dennis (centre), and Steelhead LNG CEO Nigel Kuzemko (right) address media at Steelhead's Vancouver office in 2017. The 750-person Huu-ay-aht Nation voted 70 per cent in favour of the project. (Rafferty Baker/CBC)

Despite the uncertainty that hangs over the pipeline development, Kuzemko says Steelhead LNG will continue to work with government and First Nations in an effort to find a resolution.

A news release issued just four months ago by Steelhead LNG said the Kwispaa project had entered the next phase of development with a submission to the B.C. Environmental Assessment Office and Canadian Environmental Assessment Agency.

'Open for business'

Dennis and Peters say the Huu-ay-aht First Nation will evaluate the implications of this decision by Steelhead LNG and decide how to move forward, with a further update by the end of the month.

"Huu-ay-aht remains committed to pursuing initiatives for meaningful economic reconciliation where we create opportunities to generate value in a global context and create employment and revenue opportunities locally," the letter said.

"As a nation, we continue to be open for business as we work to improve the lives of our citizens by seeking out economic opportunities," Dennis and Peters write.

At the time the project was announced, Steelhead CEO Nigel Kuzemko said the company had National Energy Board licences to export 24 million tonnes of LNG through the Sarita Bay facility annually.

But how the natural gas would be transported from northeastern B.C. and Alberta to Vancouver Island was still being worked out.

"We've done some great work with Huu-ay-aht First Nation but now we need to make certain we can get the pipeline sorted out," said Kuzemko.

Read more from CBC British Columbia

With files from Canadian Press

now