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Les Leyne: First Nations’ LNG deals left hanging

The liquefied-natural-gas dream has always been an abstract concept for most of B.C. The plants and pipelines were far away. The billions promised in benefits would go more to governments than directly to individuals.
LNG tankers such as the Liberian vessel Al Hamra would have carried liquefied natural gas from the Petronas project near Prince Rupert.

Les Leyne mugshot genericThe liquefied-natural-gas dream has always been an abstract concept for most of B.C. The plants and pipelines were far away. The billions promised in benefits would go more to governments than directly to individuals.

But to numerous First Nations near the proposed processing plants and pipelines, the benefits were much more real. They signed legal contracts with the government that quantify hundreds of millions of dollars that are set to start flowing once the gas starts shipping.

The deals based on the now-abandoned Petronas proposal look to be defunct. And the Petronas retreat raises obvious doubts about the future of all the other proposals, as well as their corresponding benefits agreements.

The one consolation to bands that are now writing off millions in anticipated long-term payments arising from the Petronas cancellation is that some got signing bonuses. That money has already been paid out, despite the fact the project is dead.

The deals that provided benefits to First Nations were key selling points over the years as the B.C. Liberals extolled the virtues of creating the new industry. The vision included lifting remote First Nations out of poverty, dealing them into the employment scene and setting them up for success, all by way of LNG money.

While there was a high-profile narrative about bands objecting to LNG developments because of environmental concerns, there was a brisk but lower-profile trade with numerous First Nations who weighed the risks and bought into the projects.

It was only a few months ago that two key First Nations came to the legislature for a signing ceremony in which they committed to backing the Petronas project and sharing significant benefits. It was a full-scale production with cabinet ministers, Pacific NorthWest LNG executives and leaders of the Lax Kwa’alaams and Metlakatla First Nations all showing up to sign on the dotted line.

The government valued the Lax Kwa’alaams deal at $98.5 million. It included millions in payouts from a trust and $7 million payable the day the final investment decision was made. There were milestone payments during construction and an annual $590,000 payment plus a share of production benefits once shipping began. Some land transfers were also in the package, along with the promise of $50 million worth of road and infrastructure improvements.

The Metlakatla deal was valued at $46 million, $5 million cash upfront. Further funds were earmarked for a shellfish project and a seniors-care facility.

All on hand agreed the deals were huge. Pacific NorthWest’s chief project officer, Wan Badrul Hisham, said they were a significant milestone. But even back then, in late February, he was fretting about the shrinking profit margin — the overseas gas price was dropping, and the price of the feed gas in B.C. wasn’t dropping as much.

A month later, another deal was signed with the Kitselas First Nation worth $13.5 million, conditional on Petronas going ahead. Chief Joe Bevan said Wednesday he was disappointed the project has been abandoned. The benefits and job-training prospects were significant. But the band got some up-front cash and built good relationships. “Not all is lost,” he said.

There are at least six other deals with coastal First Nations related to development of 10 separate LNG-plant proposals. In addition, there are dozens of benefit agreements with individual bands related to several natural-gas pipelines proposed to serve the plants. There are long lists of good things held out in such deals. Community buildings, renewable-energy projects, marine emergency-response upgrades, and education and skills programs are the ones listed just in the Lax Kwa’alaams deal.

The Petronas cancellation doesn’t necessarily spell the end to all the proposals. But it certainly doesn’t build much optimism for them. Despite the NDP’s disdain in opposition for the B.C. Liberals’ LNG framework, it included a lot of badly needed benefits for First Nations that are now hanging in the balance. They have a lot more direct stake in the projects than the rest of B.C.

That’s partly why the NDP government is now vaguely positioning to continue work on the dream, even though some would prefer to just write it off and move on.

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