Petronas Canada LNG Plant Buoyed by Incentives to Native Groups

Petronas Canada LNG Plant Buoyed by Incentives to Native Groups

A proposed $27 billion liquefied natural gas project in western Canada got a boost after British Columbia offered at least C$145 million ($111 million) in funding for native groups.

The province and two First Nation groups reached agreements that will allow Petroliam Nasional Bhd. and its partners to work “on a common goal of realizing the project,” Wan Badrul Hisham, chief project officer for Pacific NorthWest LNG, said at a news conference in Victoria on Wednesday.

The Pacific Northwest LNG project won approval from Canada’s federal government last September following years of regulatory reviews and strident opposition from indigenous communities, environmentalists and scientists who warned it could disrupt an area critical to migrating salmon. It also faced economic headwinds as more than 20 gas export proposals in British Columbia have been stalled by a global supply glut and plunging prices.

B.C. Premier Christy Clark announced the deals with the Metlakatla community and the Lax Kw’alaams — a group that had earlier spurned a C$1.15 billion compensation package from Petronas and the government.

Among the benefits pledged are:

C$98.5 million in funding for the Lax Kw’alaams and C$46 million for the Metlakatla. That includes an immediate C$7 million payout upon a final investment decision by Pacific Northwest LNG.
The communities will receive about C$0.02 for every ton of LNG that is shipped for a coastal fund.
The Lax Kw’alaams will get an additional C$4.18 million payout for a TransCanada Corp. pipeline that will supply the Petronas LNG terminal and earn C$815,000 annually in royalties from it.
More than 2,100 hectares of federal land to be transferred to the two communities.

To quell local opposition, Petronas has already been looking at modifications to circumvent a sensitive marine area. The design change could also save as much as $1 billion by eliminating the need to build a costly suspension bridge.

Petronas and its partners — China Petrochemical Corp., Japan Petroleum Exploration Co., Indian Oil Corp. and Brunei National Petroleum Co. — are in the process of reassessing the project’s costs before making a final investment decision, B.C. Natural Gas Minister Rich Coleman said in a November interview. That reappraisal is expected to be completed by April.

“We’re very optimistic this project will go ahead,” Metlakatla Chief Councillor Harold Leighton said.

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