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British Columbia Premier Christy Clark during a news conference in Vancouver, Oct. 17, 2012.John Lehmann/The Globe and Mail

The provincial government led by Liberal Premier Christy Clark is being praised for a decision to ban oil and gas development in the Sacred Headwaters region of northwest British Columbia.

First nations, environmental groups, Shell Canada and even the opposition NDP agreed Tuesday that the government made the right move in protecting the area.

"I'm speechless. I'm so moved … I'm overjoyed," Annita McPhee, president of the Tahltan Central Council, said as she considered the implications of the decision, which shuts down exploration in a major coal-bed methane field in the Klappan Valley, about 500 kilometres north of Smithers.

"It's a really great thing," said Karen Tam Wu, senior conservation campaigner for ForestEthics, a group that got more than 100,000 people to sign petitions and send e-mails calling for the area to be saved. "I feel it's a win-win for both sides."

Under the deal, Shell Canada is abandoning its drilling rights to a 400,000-hectare tenure in the Sacred Headwaters, which is so named because three important salmon rivers start there: the Skeena, Stikine and Nass.

In a statement, which confirmed details reported earlier by The Globe and Mail, the government said it will no longer issue any permits for oil or gas exploration in the area.

As part of the settlement, Shell Canada will be awarded $20-million in royalty credits by the government.

Those credits are to be applied against a water treatment plant the company plans to build in the Gundy gas field, in northeast B.C., near Dawson Creek.

The deal ends an eight-year battle that began in 2004 when Tahltan elders were arrested for blockading a mining crew on a resource road near the village of Iskut. That event made international headlines because it pitted a small band of 5,000 Tahltan against Royal Dutch Shell, a company that has 90,000 employees in more than 80 countries.

In 2008, after Shell had drilled several wells in the Klappan, the government imposed a four-year moratorium on exploration. That moratorium ended Tuesday, coincident with the government's announcement of a permanent ban on future oil and gas development. Mining restrictions are expected to follow.

Ms. McPhee said outside support from environmental groups and communities along the three rivers, was key to the Tahltan victory.

"I am just really grateful to our elders for taking such a firm stand and for helping people everywhere understand how important this area is," she said.

Ms. McPhee praised the government and Shell Canada for "listening to the Tahltan."

Lorraine Mitchelmore, president and country chair of Shell Canada, said the agreement works for her company because it fits with strategic plans to focus on the northeast gas fields, where pipelines and roads are already in place.

Developing in the Klappan wilderness would have been more difficult and costly because the region is mountainous and relatively isolated.

"We are very pleased with the deal. We have been working with the Tahltan and the government for a number of years now and this is a great outcome for all of us," she said. "It supports the Tahltan [goals] and for Shell this Klappan [tenure] is not a priority project. We are shifting towards northeast B.C. and also, I think it's a great indication of collaboration … I think it's the way to work."

Nathan Cullen, NDP MP for the region, said the government deserves praise for reaching the settlement, but he felt Shell Canada had little choice.

"I don't think there was another option for them. They needed some social licence," he said.

Mr. Cullen said the decision should send a message to Enbridge, which is facing opposition in B.C. over its proposed Northern Gateway pipeline project.

"It bodes particularly badly for Enbridge. It shows that big companies can be pushed out when they don't have the social licence," he said.

The provincial NDP also issued a statement Tuesday commending all the parties for "coming together to save the Sacred Headwaters."

Editor's Note: Tahltan elders were arrested in 2004 for their blockade of a mining crew near Iskut village. A previous version of this article online, and published in print Wednesday, did not specify that the mining crew was blockaded. This version has been clarified.