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Kitimat, B.C.: Ground zero in the race to fuel Asia Add to ...

For the people of B.C.’s North Coast, the idea of exporting natural gas is not new. In March of 1982, Dome Petroleum signed an agreement to sell liquefied gas to a Japanese company. The company set out to build a major export port just north of Prince Rupert, but the project died when Dome crumpled under a huge debt load. Those who worked on the Dome dream always held hope that, one day, such a project would get built.

“Is now the time? Well, it’s probably closer to the time than when we were doing it,” said J.R. Van Der Linden, who led the LNG project for Dome. He kept a picture of its design on his home wall for nearly two decades, only recently taken down to make room for pictures of grandchildren.

Electrical power will be a big question for Kitimat. Existing BC Hydro infrastructure is inadequate, especially if Shell follows Apache. A third serious name is also looking at Kitimat – Malaysia’s state-owned Petronas, a top LNG exporter. This year Petronas paid $1.1-billion for a 50-per-cent stake in Montney shale gas fields in northeastern B.C. that are controlled by Calgary-based Progress Energy Resources Corp.

Pipelines are yet another issue. To feed gas to Kitimat LNG, a $1-billion, 465-kilometre pipeline, Pacific Trails, is required to link to existing pipelines near Prince George in the province’s northeast, the home of the gas. Owned by the Apache-EOG-Encana venture, it would traverse a route roughly similar to the proposed Northern Gateway oil sands pipeline, which is vehemently opposed by almost every single first nation along its sketched path.

But for gas, first nations have taken a pragmatic position. Fifteen first nations, using $35-million provided by the province, will take an equity stake and are set to receive roughly $550-million over 25 years from the pipeline profits, an average of $1.5-million annually for each nation.

“It’s not the default position of first nations to oppose,” said David Luggi, chief of the Carrier Sekani Tribal Council. “We want to participate in the economy but there are limits. Oil will spill. It’ll end up on the water, whether on the coast, or our rivers, our lakes. I’m not saying gas is completely safe but it won’t pollute like oil would.”

There are hints support could be fragile. Around the northeast BC gas fields, some concerns among first nations have percolated. The fear is controversial fracturing technology – the explosive technique that unleashes shale gas below ground. It has sparked wide public concern and has led to temporary development halts, from France to Quebec and New York state. Any shift in B.C.’s openness to shale gas could have severe consequences for LNG plans.

“We’re certainly not going to promote something that’s harming any of our neighbours,” says Art Sterritt, director of Coastal First Nations, an alliance of groups on the B.C. coast.

For now, however, the support for gas drilling and exports is expansive. Nathan Cullen, NDP MP for the Kitimat region and a leadership candidate to succeed Jack Layton, backs LNG, as does John Horgan, an MLA on Vancouver Island and provincial NDP energy critic.

“The geology’s night and day. We’re drilling three kilometres in to the ground before we’re doing the fracking,” Mr. Horgan said. He’s concerned about water use but his greater worry is global competition. “We need to get going,” Mr. Horgan said. “We’re not the only people who are awash in gas.”

Kitimat was whipped by the global recession. Rio Tinto Alcan halted a $2.5-billion modernization of its smelter and West Fraser Timber, the country’s largest forestry company, shuttered an aging pulp and paper in early 2010. Thom Meier, general manager at 101 Industries Ltd., remembers when a hydroelectric expansion was suddenly halted in the 1990s. A four-line fax bore the news. “ ‘Cease all operations,’ ” Mr. Meier said. “We know the tap can turn off quickly.”

But these days, a burgeoning confidence pervades the town. 101 Industries recently built an aluminum dock that floats on the water at Bish Cove, where workers disembark to ready the gas export site.

With the Kitimat LNG project on the doorstep, and Alcan’s modernization now moving ahead, Kitimat’s three-decade decline could radically reverse. If Shell joins the action, the region could see its population of about 7,000 double as workers arrive to build the facilities.

Joanne Monaghan, the mayor, jokes that her mantle has become “mayor of boom” – a welcome change from “mayor of doom.”

“When I came 40 years ago, I said, ‘This is a giant that will some day wake.’ It’s waking.”

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