Local First Nation pitching LNG export plant on Vancouver Island

VICTORIA—A Vancouver-based company and a Vancouver Island First Nation announced plans to work together to build a liquefied natural gas (LNG) plant on aboriginal-owned land on the west coast of Vancouver Island.

Steelhead LNG Corp. and the Huu-ay-aht First Nations signed a development agreement to build the LNG plant on treaty land located near Bamfield, B.C., at the southern end of Alberni Inlet about 90 kilometres west of Port Alberni.

Steelhead said the project could represent an investment of about $30 billion, with the plant operating for 25 years.

The company said it applied to the National Energy Board (NEB) for an export permit to ship as much as 30 million tonnes of LNG a year.

Steelhead chief executive officer Nigel Kuzemko said in a telephone interview that the project is in its early days and a final investment decision on whether to proceed with the plant is at least four years away.

But he said Steelhead and the Huu-ay-aht First Nations, who signed a land claims treaty with the federal and British Columbia governments in April 2011, are working together on the project from start to finish.

“We have a partnership with the First Nation that I don’t think any other project has at this stage,” he said. “We’re in a very early phase and we’ve formed a partnership with the Huu-ay-aht First Nations, and together we’ll look at this opportunity to develop a site here.”

Kuzemko said the proposed site at Sarita Bay at Alberni Inlet offers about 300 hectares of flat, protected land, near deep water with open access to the Pacific Ocean and potential LNG markets in Japan, China and South Korea.

He said the Huu-ay-aht also offer Steelhead local environmental knowledge which will prove valuable as the project migrates its way through the regulatory approval process.

“They understand the environment and all the environmental issues in the area because as a First Nation, they’ve been on this site for generations,” said Kuzemko.

But he conceded one of the first major hurdles facing the proposal is working with pipeline companies to deliver natural gas from northeastern B.C. to the Port Alberni area, a distance of more than 1,300 kilometres, and involves crossing the Georgia Strait between B.C.’s mainland and Vancouver Island.

“One of our biggest challenges will be getting gas from northern B.C. to this site economically,” Kuzemko said. “It’s clearly one of the first questions we need to address.”

Huu-ay-aht councillor and economic development officer John Jack said his First Nation offers Steelhead certainty of its land base through its treaty and sends signals far and wide his people are open to considering business opportunities.

Jack said the Steelhead proposal appealed to the Huu-ay-aht for its economic potential, but also because the company approached the First Nation about working together early in the process and not as an afterthought.

“We appreciate and really admire the way that Steelhead has approached us at the front of this project rather than trying to get all this on their own and then coming to us after the fact,” he said. “This is very much the beginning of a process.”

Last fall, B.C. Premier Christy Clark told a Vancouver Island economic gathering that Port Alberni is ideally located for LNG developments because of its access to the Pacific Ocean and to Asia.

Her comments coincided with a protocol agreement between the Port Alberni Port Authority and the Huu-ay-aht First Nations.

The Huu-ay-aht First Nations is a 750-member, self-governing nation.

Steelhead’s investors include Kern Partners Ltd., a Calgary-based energy sector private equity firm, which is funded by leading Canadian pension funds, North American university endowments, foundations, institutions and family offices.