Port Edward, British Columbia. A liquefied natural gas terminal planned for Lelu Island, in the background at left, was rejected. Credit Robin Rowland/The Canadian Press Images
OTTAWA — A small aboriginal community in British Columbia has rejected a $1 billion payment for a natural gas project, the latest setback for the Canadian energy industry’s effort to bolster exports.
A group led by the Malaysian energy company Petronas had offered the money to the Lax Kw’alaams Band, to help push through a plan to build a liquefied natural gas ship terminal near their remote community. It is part of an overall pipeline and gas drilling project that the group, Pacific NorthWest LNG, values at 36 billion Canadian dollars.
The community, which has about 3,600 members, has consistently rejected the plan over concerns that it would harm fish habitats, particularly for salmon. After six public meetings over the issue, the band council voted against the payment.
“Hopefully, the public will recognize that unanimous consensus in communities (and where unanimity is the exception) against a project where those communities are offered in excess of a billion dollars, sends an unequivocal message this is not a money issue: This is environmental and cultural,” Garry Reece, mayor of the band, said in a statement announcing the vote on Wednesday.
Canada’s strategy to increase gas exports has been running into challenges on several fronts.
Keystone XL, a pipeline that would carry Canada’s oil sands to the American gulf coast, remains stalled in Washington. Other aboriginal groups have effectively blocked an oil sands pipeline project in British Columbia, the Northern Gateway.
Now, the liquefied natural gas project may also be in limbo.
About a decade ago, the Supreme Court of Canada ruled that native groups like the Lax Kw’alaams that never signed treaties must be consulted and accommodated when projects cross their land. Last year, the court strengthened the powers of such communities although it stopped short of requiring their consent. But few industry observers believe that Pacific NorthWest or any other energy project would ignore native groups’ wishes, a step that could invite litigation and perhaps civil unrest.
While several concerns were raised over the liquefied natural gas pipeline at the public meetings, the greatest worry appeared to involve the potential disruption of water grasses, which are used as shelter from predators by juvenile salmon. Environmental studies commissioned by Pacific NorthWest and the band reached opposite conclusions about the terminal’s impact on aquatic life. The results of a review by the Canadian Environmental Assessment Agency are not expected until the fall.
To assuage those concerns, Pacific NorthWest proposed building a 1.1-kilometer-long suspension bridge over the sea grass. It also promised jobs and infrastructure improvements. The province of British Columbia, which is actively promoting the development of a natural gas industry, is also offering to give the native group a large amount of land.
On April 30, the developers offered an unusually high payment of 1.149 billion Canadian dollars to help sweeten the deal. Much of the money would have been distributed over 40 years in payments to community members, although the amount would have increased if the project had a longer life span.
Mr. Reece said in his statement that the band had been negotiating environment issues with the natural gas group since 2011. But he added that Pacific NorthWest LNG had made “little effort to harmonize its field methods or its standards of data collection and interpretation with those of Lax Kw’alaams.” He added, though, that the community remained open to further talks.
Michael Culbert, the president of Pacific NorthWest, said in a statement that the company had consulted with native groups and made design changes to alleviate their concerns. He added that the pipeline was cleared under an environmental review by the province of British Columbia.
He said the company and its partners would “continue to assess the viability of the project.”