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A rendering of Shell-led LNG Canada’s proposed LNG terminal.

A liquefied natural gas consortium led by Royal Dutch Shell PLC is expected to receive B.C. environmental approval within days as the group positions itself to be one of the first LNG exporters in the province.

LNG Canada's plans to export from Kitimat are being reviewed by two B.C. cabinet ministers, who are slated to announce by Monday whether they will grant a provincial environmental assessment certificate.

LNG Canada, backed by Shell and three Asian partners, submitted its environmental assessment application last November to the provincial regulator. The B.C. Environmental Assessment Office referred the file in early May to Natural Gas Development Minister Rich Coleman and Environment Minister Mary Polak.

Industry observers predict the two provincial cabinet ministers will attach several conditions to their anticipated approval of LNG Canada's application. The broad goal is to decrease potential adverse environmental impacts and emphasize opportunities with First Nations. Civic and

aboriginal leaders say even one major Kitimat project will transform the region.

LNG Canada's proposed export terminal in Kitimat is slated to be on the former site of a methanol plant that was closed in 2006 by Methanex Corp., while the planned dock for LNG tankers is a wharf that formerly belonged to the Eurocan pulp and paper mill that West Fraser Timber Co. Ltd. shut down in 2010. Despite the setbacks, the local economy has been on the upswing since 2012, when construction started on Rio Tinto Alcan's $4.8-billion (U.S.) modernization project at its aluminum smelter site in Kitimat.

An LNG joint venture led by San Ramon, Calif.-based Chevron Corp. has done significant site-preparation work at Bish Cove near Kitimat since 2013. But analysts consider Shell-led LNG Canada to be in second place among major B.C. LNG proposals, trailing the Pacific NorthWest LNG project led by Malaysia's state-owned Petronas.

LNG Canada selected industrial property on the northern end of Douglas Channel. Analysts expect the group to make a final investment decision by mid-2016 on whether to invest up to $40-billion (Canadian) on construction.

By contrast, the Petronas-led consortium gave its conditional approval last week to export from Lelu Island, a picturesque location in the Skeena River estuary near Prince Rupert. The Lax Kw'alaams First Nation opposes Pacific NorthWest LNG's Lelu Island plans, citing concerns about the planned terminal's impact on juvenile salmon habitat in Flora Bank.

While members of the Haisla First Nation have been generally keen to support LNG on their traditional lands in the Kitimat area, companies advocating LNG exports to Asia need to pay greater attention to reducing environmental impacts in B.C., said former Haisla chief councillor Gerald Amos. The Haisla's traditional home is on the east side of Douglas Channel in Kitamaat Village, located near the community of Kitimat.

On a recent outing, Mr. Amos and his wife Gail boarded their fishing boat, Suncrest, for a recreational ride along Douglas Channel. He pointed out the sprawling aluminum smelter of Rio Tinto Alcan, whose roots in Kitimat date back to the early 1950s.

The buzz these days is over LNG. "Kitimat is an industrial town," Mr. Amos said. "But that doesn't mean everything about an LNG plant is hunky dory."

LNG Canada, which has months of study ahead to determine whether the project in Kitimat is economically viable, has preliminary support from Haisla leaders. Shell and BG Group PLC announced plans in April to merge, sparking speculation that the combined entity will focus on Kitimat while placing BG's Prince Rupert LNG project on the back burner.

Susannah Pierce, LNG Canada's external affairs director, said the consortium is optimistic about working co-operatively with aboriginal groups. "There will be opportunities for the Haisla and other First Nations to be a part of the construction and at some point the long-term operations," she said in a recent interview.

Kitimat Mayor Phil Germuth said he is heartened by proposals from the Shell-led group and other LNG proponents, but he has taken a stance against the Northern Gateway bitumen pipeline proposal that envisages an oil-export terminal in Kitimat. "I'm supportive of LNG and very hopeful," Mr. Germuth said.

Analysts caution that with a looming global glut of LNG, B.C. proponents will need to hurry or risk being squeezed out of the worldwide competition to export LNG to energy-thirsty customers in Asia.

The Haisla have assembled coastal properties on the rugged western shores of Douglas Channel, including for their own Cedar LNG proposals. One site has been set aside for a much-delayed LNG barge project planned by a joint venture backed by AltaGas Ltd., Idemitsu Kosan Co. Ltd., Exmar NV and EDF Trading Ltd.

The Haisla have reserve land at Bish Cove leased to the Kitimat LNG project owned by Chevron and its new partner, Woodside Petroleum Ltd. of Australia. Kitimat LNG suffered a setback last July when Houston-based Apache Corp. disclosed that it would exit the joint venture. Woodside officially joined the project in April. "Woodside's entry is a positive development for Kitimat LNG," Kitimat LNG general manager Alan Dunlop said in his recent message in a community newsletter.

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AltaGas Ltd
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