British Columbia plugs on with LNG

Proponents have slowed progress of projects, but province moving ahead with regulations, First Nations revenue-sharing agreements

By GARY PARK

For Petroleum News

The British Columbia government is continuing to assemble the pieces of its LNG export strategy regardless of the slowdown in forward progress by proponents.

It has introduced a new regulation forbidding companies from converting proposed LNG pipelines to carry conventional crude or diluted bitumen to the Pacific coast for shipment to the Asia-Pacific basin, while reaching landmark revenue-sharing agreements with First Nations, along with benefits agreements with the companies.

The Natural Gas Development Ministry has acted to snuff out any prospect of pipeline companies using approvals of LNG transportation systems as a backdoor entry for shippers who have been blocked in their efforts to build Enbridge’s Northern Gateway or Kinder Morgan’s expansion of its Trans Mountain network.

The new regulation will prohibit the British Columbia Oil and Gas Commission from allowing any conversions of natural gas pipelines intended to supply LNG terminals.

But Doug Donaldson, a New Democratic Party opposition member of the provincial legislature, said he wants legislation and not just a regulation barring the movement of light or heavy crudes in the pipelines.

Natural Gas Development Minister Rich Coleman insisted the regulation offers certainty that the pipelines will carry only natural gas.

“The province has been meeting with and addressing issues with B.C. First Nations around the development of (LNG),” he said.

“The intention has always been to create legal certainty - for First Nations and for industry as we develop the industry and regulation does that.”

Donaldson said he does not understand why the government is “so afraid and so opposed to bringing this through legislation,” arguing that regulations can be created or dropped by cabinet order behind closed doors.

The pipeline regulation applies to six proposed pipelines including TransCanada’s Prince Rupert Gas Transmission Project, which is designed to provide natural gas feedstock to the Petronas-operated Pacific NorthWest LNG plant.

Aboriginal Relations Minister John Rustad said in a news release that the oil-and-bitumen free pipeline regulation should put to rest concerns among First Nations about possible environmental issues tied to oil pipelines.

The government has been trying to exempt most of the sweet gas produced and transported in British Columbia from mandatory environmental assessments.

Meanwhile, eight northern First Nations have signed benefits agreements, raising the level of aboriginal support for LNG to 40 percent of 20 First Nations affected by LNG plants on the northwest coast or along pipeline routes.

Three of the First Nations signed revenue deals with the province covering TransCanada’s C$4.7 billion Coastal GasLink pipeline that would feed Shell Canada’s LNG plant at Kitimat, while one community has reached a parallel deal for the C$6 billion Price Rupert pipeline.

The pacts total C$14.1 billion and would be phased in as the pipelines were built.

In addition, First Nations along pipeline routes can share in C$10 million for each project from the province.

Wet’suwet’en First Nation Chief Karen Ogen said her community views gas pipelines as more benign than oil systems, regardless of the possibility of a gas explosion.

She said her community has to weigh the economic opportunities or face the risks of declining financial support from the Canadian government, poverty, poor housing and a lack of jobs and education for children.

Ogen estimated her 242 residents stand to collect C$2.8 million from revenue sharing.