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Aerial shot of Sarita Bay from Steelhead LNG Corp.

Steelhead LNG/Handout

Leaders of the Huu-ay-aht First Nations have thrown their support behind a liquefied natural gas project on Vancouver Island after members approved the proposal in a referendum.

Huu-ay-aht elected chief councillor Robert Dennis Sr. and head hereditary chief Derek Peters said on Monday that they are looking forward to working co-operatively with Steelhead LNG to develop an export terminal at Sarita Bay, 75 kilometres southwest of Port Alberni.

The Huu-ay-aht are part of the 2011 Maa-nulth First Nations Final Agreement, one of a handful of treaty and land claim pacts in British Columbia.

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Of the 201 valid ballots cast recently by Huu-ay-aht members, 70 per cent voted in favour of approving the Sarita LNG project. Twenty-three ballots were spoiled in the referendum, which was conducted over two weeks.

"It's not just about what we can get for ourselves, but the value and the contributions we can make to B.C. and Canada and to the economy," said John Jack, a member of Huu-ay-aht's elected council. "So, this is an example of a First Nation working with business and working with the people of B.C. and Canada in order to create value in a way that fits both of our interests."

The Huu-ay-aht will participate in the development of Sarita LNG, including a co-management deal that calls for the enhancement of salmon stocks, which have dwindled over the decades in the Sarita River on the western side of Vancouver Island.

"This is also a deal that is a landmark agreement because it is a great example of free, prior and informed consent by a First Nation on a large-scale project where great value will be created not just for us and not just for the proponent," Mr. Jack said during a news conference in Vancouver. "But this could potentially get northern B.C. and Alberta gas to market in Asia, which contributes directly to the Canadian economy."

Leaders of the 750-member Huu-ay-aht First Nations say they are pleased to be working with Steelhead on the Sarita LNG export site near Bamfield.

Nearly 100 Huu-ay-aht members live in the main village of Anacla, about 300 are in the Port Alberni region, and the rest are spread mostly across British Columbia.

In a regulatory filing late last year, Calgary-based natural gas producer Seven Generations Energy Ltd. said it has invested $25.8-million for a 34-per-cent stake in Steelhead. The majority owner of Steelhead is Azimuth Capital Management, a private equity firm based in Calgary.

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Steelhead oversees Sarita LNG and also heads another proposal, Malahat LNG, which is envisaged for a site near Mill Bay on Vancouver Island. Malahat LNG's controversial export site is on property that includes the former Bamberton cement plant and is now owned by the Malahat First Nation.

A pipeline would be needed from the Malahat LNG site to Huu-ay-aht's traditional territory at Sarita Bay.

In 2015, Steelhead retained Williams Cos. Inc. to build a 128-kilometre pipeline, starting with a 53-kilometre segment in Washington state and then extending 75 kilometres underwater. The goal of the Island Gas Connector pipeline is initially to transport natural gas across the Salish Sea to Malahat LNG.

But the weak state of the oil-and-gas industry is casting doubt on the 19 proposals the province is considering to export LNG. Royal Dutch Shell PLC announced the cancellation earlier this month of its Prince Rupert LNG project on Ridley Island in northwest B.C.

And in early 2016, AltaGas Ltd. halted plans for the Douglas Channel LNG joint venture near Kitimat.

"The market is challenging," Steelhead chief executive officer Nigel Kuzemko said in an interview. "We knew it was going to be tough. We're about being patient, and making sure things happen the right way. That is fundamental for us."

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Mr. Kuzemko expects to file an application in 2018 to seek regulatory approval from the B.C. Environmental Assessment Office, followed by Steelhead's final investment decision by early 2020.

Three plants are proposed for Vancouver Island: Sarita LNG, Malahat LNG and Discovery LNG, which is slated for Campbell River.

Fourteen projects are focused on terminals planned for northwestern British Columbia. Two projects are slated for the Lower Mainland: Woodfibre LNG near Squamish and WesPac Midstream LLC's Tilbury Island proposal south of Vancouver.

Woodfibre LNG is scheduled to begin construction later this year – the lone B.C. LNG project so far to decide that it is worthwhile to build despite sharply lower prices for the fuel in Asia.

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