B.C. residents dealt disappointing blow as LNG Canada delays Kitimat project

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A decision by LNG Canada to indefinitely delay a proposed liquefied natural gas plant in Kitimat has sent a shock wave across northern B.C., says the leader of a small aboriginal community that was hoping to work on the project.

"We had been preparing for it and I think the whole northwest region had been preparing for it," said Chief Joseph Bevan of the Kitselas First Nations. "The whole region is fairly disappointed."

The Kitselas traditional territory lies near Terrace, along the route of a $4.7-billion pipeline that would have been built to supply the $40-billion export plant proposed by LNG Canada.

LNG Canada, a joint venture led by Royal Dutch Shell PLC, announced Monday that its final investment decision, which had been expected by the end of July, is being put back, with no revised timeline available. That decision also delays TransCanada Corp.'s plans to build the Coastal GasLink pipeline that would have delivered gas to Kitimat from northeast British Columbia.

The decision was seen as a sign that many of the more than 20 proposed energy projects in the province will also likely stall because of plunging LNG prices in Asia.

The BC Liberal government, which in 2013 campaigned on a promise of a booming LNG sector, has expressed confidence that LNG Canada and other gas-export projects will go ahead.

But Mr. Bevan said the future of the project obviously hangs on what happens with global LNG prices, and nobody can predict that.

"LNG Canada is committed to see this project through to the end, and I guess it's just a matter of when will the market rebound? That's the million-dollar question that needs to be answered before they can move this forward," he said.

Mr. Bevan said people in his community had been looking forward to the construction jobs that would have flowed from the LNG plant and pipeline, and they will find it hard to adjust to diminished opportunities.

He said that on the positive side, the Kitselas government learned a lot in negotiations with LNG Canada and will be better prepared to deal with any future energy projects that come forward.

"Quite honestly, it could be anything now – gas or oil or any project – and we know how to approach it," he said, adding: "Before it used to be kind of a fear of 'What will this mean?' Now it's more, 'Wow, it's actually good to engage and here's how we'll do it.' At the same time, it's frustrating to get all geared up and get all ready to go and then go boom, okay, park it everyone, you have to wait."

Art Sterritt, a spokesman for the Gitga'at First Nation, said his community had worked out benefit agreements with LNG Canada and a lot of people were looking forward to seeing the project proceed.

The Gitga'at are based at Hartley Bay, a small coastal community that lies on the proposed LNG tanker shipping route.

Mr. Sterritt said the Gitga'at are "disappointed but not devastated" by the LNG Canada decision, because the community diversified its economy following the collapse of commercial fishing over a decade ago.

He said the Gitga'at are rebuilding their fishing capacity, are engaged in forestry and have a booming eco-tourism industry in the Great Bear Rainforest to keep people working.

Mr. Sterritt said he thinks the LNG project will likely resurface when energy prices increase, and it should be easy to restart the process.

"[The company] invested a lot of money to develop the project. They did get it to a point where they've got all the i's dotted [in agreements with First Nations], and so they can come back without much delay," he said. "We don't have to reinvent it all."

Mr. Sterritt said he expects other LNG projects in British Columbia will also be delayed. "I believe it is a signal of where we are going," he said.

The International Energy Agency recently forecast that there will be a glut of LNG worldwide over the next five years, with demand weakening in Asia while supply rises in the U.S. and Australia.

LNG Canada is a joint venture involving Shell, PetroChina Co. Ltd, Mistubishi Corp. and Kogas, a South Korea company.