Haisla chief counsellor Crystal Smith at Kitamaat Village, British Columbia on Friday, Oct. 5, 2018.Amber Bracken/The Globe and Mail
An Indigenous-led project to export liquefied natural gas has been approved by its proponents, who are touting the B.C. energy development as a prime example of economic reconciliation.
The Haisla Nation and Pembina Pipeline Corp. PPL-T said on Tuesday that they have made a final investment decision to forge ahead with their US$3.4-billion Cedar LNG project.
The Haisla have a 50.1-per-cent stake in the joint venture while Calgary-based Pembina owns 49.9 per cent.
Cedar’s floating production facility will be located on the Haisla’s traditional territory in Kitimat, B.C.
“We’re tired of managing poverty. It’s time that we now manage prosperity,” Haisla chief councillor Crystal Smith said in an interview from the main reserve of Kitamaat Village, located about a 15-minute drive south of Kitimat.
Ms. Smith said having financial stability will mean that a new program to teach the Haisla’s culture and preserve their language will be sustained and have long-lasting effects. “Growing up, we never had the opportunity to fully learn our language,” she said.
Nearly 93 per cent of Haisla members who participated in a ratification vote last month on Cedar supported plans by the elected band council to borrow money for the development, construction and co-ownership of the LNG venture. “They supported our nation’s desire to move forward in terms of economic development, economic reconciliation,” Ms. Smith said.
About 800 of the more than 2,000 Haisla members in British Columbia live in Kitamaat Village, the seat of government of the Haisla.
Cedar awarded a contract in early 2024 for engineering, procurement and construction in South Korea of a floating production unit to Samsung Heavy Industries and Black & Veatch.
Construction activities in Kitimat will create about 500 jobs at Cedar, which will require nearly 100 full-time workers for operations.
“Through our partnership with the Haisla Nation, I believe we are redefining how Indigenous communities and the energy industry can work together to bring Canadian energy to the world,” said Pembina chief executive officer Scott Burrows.
Shell PLC-led RYDAF LNG Canada, which is also located on the Haisla’s traditional territory in Kitimat, is the first LNG export project to be under construction in the country. It will be Canada’s largest LNG export facility when it starts shipping within a year.
Cedar is slated to begin production in late 2028 and become Canada’s second-largest LNG export project.
The contentious Coastal GasLink pipeline project, to be operated by TC Energy Corp. TRP-T, will first supply the LNG Canada megaproject and then Cedar.
Coastal GasLink will need to build the new Mount Bracey compressor station in Northeastern B.C. to expand capacity of natural gas on the existing pipeline project, which completed construction last October of the 670-kilometre route from Northeastern B.C. to Kitimat.
Cedar won approvals last year from federal and provincial environmental regulators.
Prime Minister Justin Trudeau and B.C. Premier David Eby congratulated Cedar for making the final investment decision.
“The Haisla Nation will manage its own revenue stream. That’s revenue to build up your community, for your members on your terms,” Mr. Trudeau said in a video message released on Tuesday.
“Cedar LNG is a shining example of how natural-resource development should work in our province in full partnership with First Nations, in line with our commitments to fight climate change,” Mr. Eby said in a separate video.
The LNG sector asserts that natural gas originating from B.C. will serve as a transition fuel, displacing thermal coal to generate electricity at plants in Asia. But that scenario is disputed by critics such as the Institute for Energy Economics and Financial Analysis, a U.S.-based research group.
Critics of B.C. LNG include climate activist groups and some Indigenous leaders such as hereditary chiefs from the Wet’suwet’en Nation. They are questioning claims by the LNG industry that B.C. projects will be able to comply with what the provincial government calls credible plans to reach net-zero emissions of greenhouse gases.
Organizations such as the David Suzuki Foundation, International Institute for Sustainable Development, Environmental Defence and Clean Energy Canada say the country needs to concentrate on renewable energy, not on fossil fuels such as LNG that are warming the planet’s climate with emissions of greenhouse gases.
They warn about increased GHGs from potent methane leaks during the production of natural gas through fracking, including in the Montney formation in Northeastern B.C. and Northwestern Alberta.
“It is highly unlikely that LNG exports can be scaled up without seriously jeopardizing Canada’s ability to meet its net-zero commitments and harming the environment,” geoscientist David Hughes wrote in a report released by the Suzuki Foundation.
Cedar will require US$3.4-billion in capital spending and US$600-million in other expenses, including interest paid through financing arrangements during construction, as well as transaction costs.
In Kitimat, the project will use electricity from BC Hydro for powering electric motors that drive compressors for liquefaction. Cedar plans to operate at 0.08 carbon dioxide equivalent tonnes for each tonne of LNG produced, which is below B.C.’s limit for “emissions intensity” of 0.16 CO2 equivalent tonnes.
Calgary-based ARC Resources Ltd. ARX-T has agreed to be a major supplier of natural gas for Cedar, with a 20-year commitment.
The United States has seven operational LNG export terminals. Another five facilities appear likely to open within four years in the U.S.
Canada, by contrast, has no LNG export terminals up and running. The first to enter service will be LNG Canada’s Kitimat project, which is scheduled to begin loading tankers with fuel bound for Asia by mid-2025.
Cedar will become only the third LNG export project to be under construction in Canada, after LNG Canada in Kitimat and Woodfibre LNG near Squamish, B.C.
Woodfibre’s floating hotel for construction workers was finally moored at the project’s construction site on Friday, after a series of delays.
LNG Canada’s terminal will have an export capacity of 14 million tonnes a year, compared with annual capacities of 3.3 million tonnes at Cedar and 2.1 million tonnes at Woodfibre.
The start of construction of LNG Canada in 2018 has led to much-needed revenue for the Haisla through benefits agreements, and sparked economic development in the Kitimat area, notably in Kitamaat Village. New buildings in Kitamaat Village include a youth centre, a health facility and an affordable-housing complex with 23 units.
Kitimat Mayor Phil Germuth welcomed Tuesday’s announcement by Cedar, saying the region is growing as an energy hub. The community, which was founded by Alcan Aluminum Ltd. in the early 1950s, welcomed the opening of an aluminum smelter in 1954, but watched other industries leave.
Shipping LNG from Canada’s West Coast to Asia will be along a more reliable trade route than vessels transiting through the Panama Canal or Suez Canal, say industry experts, who point out that the shipping distance to Asia from Kitimat is about 50 per cent shorter than the route to Asia from the U.S. Gulf Coast.
Still, dreams of B.C. becoming a major global LNG player have faded.
Eleven years ago, there were more than 20 proposals in B.C. to export LNG. Today, three projects are anticipating exports within the next 54 months: LNG Canada within one year; Woodfibre by late 2027; and Cedar by late 2028.
LNG Canada is also considering a Phase 2 expansion.
Just two other B.C. projects are actively seeking to ship LNG in tankers to markets in Asia: Ksi Lisims LNG on Pearse Island; and FortisBC’s expansion plans at its domestic Tilbury LNG site in Delta.