LNG proponents address concerns about West Coast project

Huu-ay-aht First Nation elected Chief Councillor Jeff Cook and Steelhead CEO Nigel Kuzemko spoke with Windspeaker to answer a range of questions arising from the proposed $30-billion (US) LNG terminal that received a nod from Huu-ay-aht citizens Nov. 29.

Huu-ay-aht voted 121-77 to proceed with an intensive feasibility study and the purchase of 330 hectares of property in the Sarita River estuary during the People’s Assembly held in Port Alberni.
That land would then be leased back to Steelhead LNG, a Vancouver-based project development company, for the projected 35-year life span of the terminal.

Cook explained that the land was pre-approved for purchase under the Maa-nulth Treaty, which came into effect for Huu-ay-aht and four other Nuu-chah-nulth nations in 2011.

“We have an agreement with Steelhead that as long as we are moving forward, they would forgive the purchase of it,” he said. “Our nation took out a loan from the bank, but Steelhead is making the monthly payments. In the end, the loan will be forgiven.”

Should Steelhead cancel the project, they would be responsible for the mortgage, Cook said, adding that should Huu-ay-aht cancel, they would take responsibility for the balance owing.

Speaking to concerns about the project’s potential damage to the marine environment, Cook said the plant itself would be located on dry land. “The only thing in the water will be the jetties,” he said.

Opponents to the project have cited overlap issues in traditional territories, which include the marine corridors that the massive LNG ships would use, along with impacts on traditional resources. Cook said he does not anticipate any difficulties with neighboring nations.

“The overlaps are defined pretty well from our point of view. We’ve established a boundary with Tseshaht First Nation; we’ve defined a management area with Ditidaht, and in our Maa-nulth Treaty, our boundaries with Ucluelet and Uchucklesaht our areas are pretty well defined. There shouldn’t be any serious negotiations we have to go through.”

Grand Chief Stewart Phillip of the Union of B.C. Indian Chiefs told Windspeaker one of his main concerns is the quadrupling of natural gas exploration and hydraulic fracturing (fracking) required in the Treaty 8 territories in northeastern B.C., in order to satisfy the projected demand for export LNG.

“The pipeline issue is the biggest hurdle we have to overcome,” Cook said. “We know we are going to have to sit down with First Nations.”

Kuzemko said those discussions have already begun with a two-day visit to Treaty 8 territory to learn about the extraction process.

“We took the Huu-ay-aht to a company that was doing [fracking], and they met with the two First Nations that were there. They talked about it and the First Nations were comfortable with it. They understood the benefits and they understood the risks.”

Kuzemko was reminded of the sheer number of LNG proposals currently in the work in B.C. That raises two questions, he said. First: does B.C. have enough natural gas? Yes. Second: can you be competitive on price?

“We believe we will be, primarily because we are not a ‘major’ (petroleum company). We don’t have upstream assets – all we want to do is make this project happen.

“We’ll get gas supplied to it by independent producers in Canada. Those independent producers produce the lowest-cost gas anywhere – lower than the majors… I reckon we will get the lowest-priced LNG on the market.”

According to Steelhead, up to 4,000 jobs would be created during the building of the plant and the installation of LNG infrastructure. Kuzemko conceded that many of those jobs would go to foreign specialists.

But the plan is to train as many Huu-ay-aht as possible, he said. To that end, Huu-ay-aht and Steelhead have reached skills training agreements with the province and with three Vancouver Island post-secondary institutions: North Island College, Vancouver Island University and Camosun College.

“All the training programs are something we will be looking at in great detail, as of this week,” Kuzemko said. “Right now, there are training slots at North Island College that are being held open for Huu-ay-aht. That process has started already.”

Kuzemko noted that the first phase of the project would be an exhaustive feasibility study on a full range of environmental and engineering issues, which is expected to take about 12 months. The final investment decision is not expected until 2018, however.

Keith Hunter has served as a technical advisor for Tseshaht First Nation during the long-running assessment process for the controversial Raven Underground Coal Project, which would see coal trucked across Vancouver Island to Tseshaht territory in Port Alberni.

“They’ve spent $10 million on it and still haven’t got an application through the review process,” Hunter told Windspeaker prior to the People’s Assembly.

Hunter said in some instances, the proposal itself becomes the revenue generator for the proponents – as long as they can continue to attract investors.

Kuzemko was asked if he recognized the risk of the Huu-ay-aht LNG project becoming a revenue-generating engine in itself, with millions of dollars being paid out in consultant’s fees and executive compensation.

Kuzemko said that was a “fair question,” and that Steelhead has structured itself to remove any incentive to spin out the assessment process.

“Our business is that we develop projects. The only way we will get any revenue from this project is if it goes ahead, and we begin to sell LNG. Our investors are very acutely aware of that. As we go into this, there is nothing that we would be interested in doing if we can’t see a way forward.”

Related story: http://www.ammsa.com/publications/windspeaker/huu-ay-aht-members-prepare...