B.C., Haisla sign ownership deal for potential gas development site

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The province of British Columbia has signed a deal allowing the Haisla First Nation to take ownership of a swath of coastal waterfront that could one day be used to build natural gas export facilities.

Under the framework agreement signed Friday, the Haisla gain the ability to lease or buy 700 hectares of land, and another 102 hectares of "unsubmerged" foreshore, along Douglas Channel. It is a spot that has attracted global interest as a potential location for the export of B.C.-produced liquefied natural gas to markets in Japan, South Korea, China and India. Already, three projects have been planned for the area near Kitimat, B.C., one led by Royal Dutch Shell PLC, one backed by Apache Corp., EOG Resources Corp. and Encana Corp. and another backed by a consortium of small and mid-sized natural gas producers.

The land in question sits outside of parcels already selected by those companies. It could be used to enable expansion of existing projects, or construction of new ones. Exxon Mobil Corp., for example, has looked to northwestern B.C. for a possible export terminal, but has yet to detail a project.

By giving the Haisla the ability to take ownership of land, the B.C. government is attempting to smooth the way forward for new projects, for whom dealings with the Haisla are a critical component of gaining access to the area.

"This will provide certainty for investors," said Ida Chong, Minister of Aboriginal Relations and Reconciliation." She added: "It will also ensure first nations have a meaningful role in the decisions about land and resources that could affect their rights."

Under the deal, the Haisla have the ability to secure leases to the land for up to 60 years, or the ability to buy it outright. The price of such transactions was not disclosed, but will be based in part on a provincial assessment of the land's value.

The Haisla have previously negotiated to allow the Apache-led project, called Kitimat LNG, to build on reserve land. This new deal with B.C. enlarges the land the Haisla can take ownership of, and comes as part of a broader strategy to drive revenues from the first nation's traditional claims to the area.

"We see land as an essential element in building a strong and sustainable economic future for the Haisla people," said Haisla chief councillor Ellis Ross.

He added: "It's something brand new for our people, but it's looking at land in a different light."

The northern B.C. coast has attracted interest from the top echelons of the energy industry for its proximity to the prolific new gas fields in the north-east of the province, and its potential to liquefy natural gas and move it to Pacific markets.

Five companies have publicly discussed their plans, including BG PLC, which recently signed a deal with Spectra Energy Corp. for a pipeline that would feed a project that could cost upwards of $20-billion to build, and Petronas, the Malaysian gas giant. Both of those companies are looking to build at Prince Rupert, which is northwest of Kitimat. On Friday, the B.C. government said two others are also interested in the region.

However, the cost and complexity of building new natural gas terminals has historically meant many proposals are not built. And analysts and investment bankers say some consolidation is inevitable. At this point, though, the volumes of gas being considered for export off the B.C. coast exceed the forecast production for all of Alberta a decade from now.