Accord brings first nations on board with LNG project

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A multibillion-dollar natural-gas export project has agreed to pay more than $200-million to a group of British Columbia first nations in exchange for their support.

A deal between the backers of the Kitimat LNG project and the First Nations Group Limited Partnership, a consortium of 15 northern aboriginal groups, promises to secure local peace for a major new energy project in British Columbia. Its official signing, at the outset of a government-organized LNG conference in Vancouver on Monday, was "a very important milestone," said Janine McArdle, senior vice-president of gas monetization for Houston-based Apache Corp.

Apache and Chevron, the global energy giant, are seeking to build a multibillion-dollar pipeline and LNG terminal to export natural gas to Asia from near Kitimat, B.C.

First nations will receive money in instalments as the Kitimat LNG project advances in steps, according to the deal.

Aboriginal groups will receive a percentage tied to the length of the natural-gas pipeline, called Pacific Trails, that crosses their territory.

Though Chevron and Apache have yet to commit to building the project, the deal is the consummation of a negotiating tactic whereby first nations groups seek a price for their support, which can substantially smooth the path for a large industrial development.

"It creates certainty for the projects and it reflects the value the first nations are bringing," said Robert Metcs, chief negotiator for the aboriginal partnership.

That value comes from the "risk reduction" and faster development pace possible for developers when they face no first nations opposition.

"At the end of the day, we arrived at a figure to be an equal for those things," Mr. Metcs said. "The idea was to get the first nations on side during the process of approval and also during the process of construction."

The $200-million comes in addition to $32-million provided to the first nations by the B.C. government. That money will be lent by the aboriginal partnership to Kitimat LNG, and paid back over 35 years, providing a persistent, although smaller, revenue stream.

Agreements on hiring aboriginal workers and companies will bring "tens of millions" in additional benefits, Mr. Metcs said.

The Kitimat LNG deal did not receive universal support, with the Wet'suwet'en Clans and House groups declining to sign. David de Wit, natural resources manager with the Wet'suewet'en, said the group decided it was not in its best interests, pointing to the cultural importance of the Morice Watershed and suggesting the gas pipeline agreement could be a Trojan horse.

The "benefits agreement speaks of a northern energy corridor which alludes to other major pipeline projects along the proposed alignment," he said.

Other first nations, however, have begun to view deals with industry as a way to pull themselves out of poverty. Aboriginal groups are looking for "economic independence" as they assess whether to support deals with large developers, said Dave Lavallie, manager of Haisla Business Operations.

That means both community independence, in the ability to deliver social services, and individual independence, in "the opportunity to be trained, employed, have contracting opportunities," he said.

Companies, meanwhile, are pledging to give local communities a meaningful voice as they seeks to build an LNG industry that stands to attract tens of billions of dollars. Take TransCanada Corp. The Calgary company is working to build the controversial Keystone XL project, but also has contracts to construct pipelines to a pair of proposed coastal LNG plants.

On Monday, TransCanada Corp. CEO Russ Girling said the consultation process for LNG developments is going well in British Columbia.

"Nobody is being steamrollered," he said.