Skip to main content

Byng Giraud, vice-president Corporate Affairs at Pacific Oil & Gas - Woodfibre LNG, right, and Rick Kormendy of Western Forest Products tour the site of the proposed Woodfibre LNG Project, a proposed small-scale liquefied natural gas processing and export facility, in Squamish, British Columbia, Wednesday, July 23, 2014. The project would be located on an existing industrial site, the former Woodfibre pulp mill and it could export approximately two million tonnes of LNG per year.Rafal Gerszak/The Globe and Mail

Byng Giraud walks across a bridge over Mill Creek and dares to imagine a future where liquefied natural gas will be exported by tankers from waters near Squamish, B.C.

The vice-president of corporate affairs at Woodfibre LNG starts to rattle off what he sees as advantages for building an export terminal on the site of a former pulp mill: The property is zoned for industrial use and has a deep-sea port. Another positive, he adds, is that FortisBC plans to construct a natural gas pipeline partly through an existing route to minimize the environmental footprint.

Despite his enthusiasm for the site located seven kilometres southwest of Squamish, Mr. Giraud acknowledges that Woodfibre LNG is entering troubled waters. Environmentalists and other activists are stepping up their protests, against a backdrop of LNG cheerleading from the B.C. government.

Premier Christy Clark describes the fledgling B.C. LNG sector as a once-in-a-generation opportunity to bolster the province's finances and create tens of thousands of jobs. She campaigned hard in touting LNG's prospects during B.C.'s general election in May, 2013. Her B.C. Liberal government boasts that the industry has the potential to transform British Columbia and erase $62-billion in provincial debt, based on a scenario of expected tax revenue from five LNG projects.

The Woodfibre LNG proposal, one of 15 competing plans to export from the West Coast to energy-thirsty Asia, would be the first B.C. LNG project to launch.

It is one of the smallest proposals, and deemed by industry experts to have the fastest path toward winning consent from First Nations and gaining regulatory approval.

Woodfibre LNG is bracing for a rough patch as it edges closer to making a final investment decision by mid-2015 on whether to proceed. Other B.C. LNG proposals won't be getting a free ride either, judging by mounting opposition to Woodfibre LNG in Squamish and nearby communities such as Lions Bay and West Vancouver.

But Mr. Giraud believes a silent majority of Squamish residents back LNG, with supporters being drowned out by vocal critics.

During a tour of the Howe Sound site, accessible only by boat, Mr. Giraud raves about the location. "This is a perfect site for industrial activity. It's great. This site was used for a century by pulp mills and other forestry operations," he says, looking up at a BC Hydro line and then pointing to the vicinity where FortisBC's proposed $400-million, 52-kilometre gas pipeline project in the Lower Mainland would connect with the planned export terminal.

Mr. Giraud notes that the terminal would tie into BC Hydro's grid and allow electricity-driven compressors to super-cool natural gas into LNG instead of relying on the more polluting method of gas-fired power generation.

Should Woodfibre LNG become reality, it is slated to start exporting mere weeks before the next B.C. general election in May, 2017 – an ideal backdrop for Liberal candidates on the campaign trail. Despite its relatively small size at one-10th of the annual output envisaged by major ventures in northwest B.C., a revised estimate of $2-billion has been budgeted to build Woodfibre LNG's export terminal and related infrastructure, not counting the $400-million pipeline project to be taken on by FortisBC.

Critics complain some of the natural gas will originate from fracking operations in northeastern British Columbia. For those opposed to Woodfibre LNG, that amounts to using "dirty gas" that is a threat to water supplies.

Being first out of the gate in a crowded field of B.C. entrants, Woodfibre LNG is attracting attention on a basket of broader issues – everything from fracking to global warming to resource extraction in general.

Tracey Saxby, co-founder of anti-LNG group My Sea to Sky, says the picturesque Squamish region needs to play up its strengths in Howe Sound tourism and outdoor recreation. She warns there will be negative impacts to Mill Creek and a nearby salmon stream, and no amount of improvements will ever persuade My Sea to Sky members to support LNG exports because the global drawbacks such as climate change far outweigh the local economic benefits.

"The problem is that any mitigation measures that are applied still mean that there will be an impact," Ms. Saxby says. "There are so many negative possibilities associated with these kind of LNG projects."

Patricia Heintzman, a councillor in the District of Squamish, will raise the topic of Woodfibre LNG at the Aug. 19 council meeting. She is pushing for a referendum to be held during the Nov. 15 civic election to determine whether Squamish should welcome the development or shun it. Even though such a vote would be non-binding on the province and the district, Ms. Heintzman says Woodfibre LNG needs to have a social licence to proceed, and the referendum is the way to go to gauge public opinion.

Woodfibre LNG says it doesn't oppose the concept of a referendum, but it needs time to prepare environmental assessment documents so it makes more sense to stage a municipal vote on the project in 2015, not during November's civic election. The seven-person council, including Squamish Mayor Rob Kirkham, will need to decide by late September to make the deadline for putting a referendum question on the Nov. 15 ballot.

Squamish Councillor Doug Race says he will oppose efforts to hold a referendum. "We're elected to make decisions. We're not elected to kick them back to the population just because they might be tough decisions," he says. "Any town in B.C. or Canada would be falling over themselves for such a project."

Much of the attention among environmentalists and community activists has focused on opposing two oil pipeline proposals, namely Enbridge's Northern Gateway project and Kinder Morgan's plans for expanding its Trans Mountain line. While First Nations in B.C. have strongly voiced their opposition to oil because of the risk of leaks on land and catastrophic spills into water, some aboriginal leaders have welcomed LNG because it is seen as posing much less of an environmental gamble.

Squamish First Nation Councillor Chris Lewis, though, cautions that his group is still studying Woodfibre LNG, which is privately owned by Singapore-based RGE Pte. Ltd. and controlled by Indonesian businessman Sukanto Tanoto. "The Squamish Nation takes all potential impacts on its aboriginal rights and title interests very seriously," Mr. Lewis says.

Barry Munro, Ernst & Young LLP's Canadian oil and gas leader, says success for Woodfibre LNG and the other 14 proposals won't come easily because there are so many moving parts. The challenges range from trying to line up Asian customers to waiting for the B.C. government's much-delayed LNG tax and regulatory regime, now due for completion by the end of November.

"We're in a very delicate time," Mr. Munro says. "These projects must be globally competitive. There are a lot of factors at play. There is a great deal of uncertainty and project execution is extremely difficult."

Industry experts believe B.C. will be lucky by 2020 to have one small-scale project such as Woodfibre LNG and one major venture in northwestern B.C., perhaps the Pacific NorthWest LNG proposal led by Malaysia's Petronas or the Shell Canada Energy-led LNG Canada project.

While the provincial government is optimistic about the private sector running five LNG projects eventually, there is no guarantee that even one will be built.

Western Forest Products Inc. closed its Woodfibre pulp mill in early 2006. More than eight years later, Woodfibre LNG says it is keen to revive the site and breathe new life into Squamish's economy. Woodfibre LNG is forecast to create 500 construction jobs and have 100 full-time positions once the plant begins operations.

Western Forest Products sold the site last year to Woodfibre LNG, conditional on cleaning up the property. Squamish residents should recognize the economic benefits of industrial activity, says Rick Kormendy, a power engineer and site manager for Western Forest Products who now serves as the caretaker of the property during the transition to the new owner. In its heyday, the pulp mill employed 550 workers.

"We need industry and we are a resource-based country. If you want proper health care, education and other services, you need to have money and you get that tax revenue from industry," Mr. Kormendy says.