Proposed LNG exports spark controversy in British Columbia

British Columbia has a reputation as a modern North American energy utopia. The province has abundant hydroelectricity, ambitious greenhouse gas emissions reduction targets and a functioning, uncontroversial carbon tax. Attempts to ship oil and coal through British Columbia have been stonewalled by indignant locals.

But aboriginal communities in British Columbia’s northeast corner wish more attention would be paid to fossil fuel development inside the province, which has been largely ignored as the rest of the province debates the potential global carbon footprint of the government’s push to become Asia’s primary source of liquefied natural gas.

A half-dozen aboriginal communities, known in Canada as First Nations, have lived for centuries off the land and rivers that sit atop the Montney and Horn River shale formations. They’re known as the Treaty 8 First Nations, after the contentious agreement they struck with British settlers in 1899.

The issue has been simmering for the past few years, as dozens of oil and gas companies have rushed to tap into the 700 trillion-plus cubic feet of gas estimated to sit in the formation.

Their collective footprint is huge. There are almost 20,000 drilling wells in northeastern British Columbia, and more than 100,000 kilometers (62,000 miles) of pipeline, according to Roland Willson, chief of the West Moberly First Nations. He said there are four currently proposed pipelines that would pipe gas from the region to the coast for LNG export.

“Before anyone even knew what was going on with shale gas, they were already opening holes in the ground and going at her,” said Willson.

Mired in economic doldrums, the provincial government is now looking to export gas to coal-dependent Asia, where natural gas is currently valued at upward of $16 per million British thermal units. The first step in this development, the construction of a handful of coastal LNG plants designed to compress raw gas into an exportable liquid, is predicted to begin next year.

With natural gas extraction already deeply entrenched in northeastern British Columbia, exposure to Asian markets would likely accelerate this development even more.

“When we reach our potential for liquefied natural gas, it will have the same impact on Canada’s national economy that the oil sands in Alberta have had,” British Columbia Premier Christy Clark told The Wall Street Journal last month.

Water, forest and caribou concerns

The breakneck development has raised a few environmental and political objections, the majority coming from First Nations, who have been living on the business end of natural gas development in British Columbia for years.

First Nations in the Horn River and Montney shale regions are complaining about the gallons of water being sucked out of the local water table to fuel hydraulic fracturing. They’re also worried that the clearcutting of forest to create roads and make room for drill pads is removing valuable cover for moose and caribou, leaving them dangerously exposed to predators.

Willson said caribou, in particular, “used to be like bugs on the landscape,” but now their numbers have declined from thousands to fewer than 400 in the southeast of Treaty 8 territory.

Calgary, Alberta-based energy company Encana Corp., in a fact sheet on its Montney Shale development published last year, said it seeks to “maximize the use of existing roads or other linear disturbances and choosing sites with less local impact.”

Lana Lowe, director of the Fort Nelson First Nation department of lands and resources, said hunters are also finding it harder to catch moose, a centuries-old food source in the region.

“This isn’t a small land disturbance,” she said. “The latest [project] we’re dealing with is 950 square miles of land disturbance.”

And most of the wood that’s cut down ends up being burned. An agreement with the First Nations allows about 8.65 million cubic meters of timber to be harvested every year, though that number only applies to forestry and logging operations, according to Kieran Broderick, a registered professional forester whose company did contracting work for the Treaty 8 Tribal Association.

“I never did receive detailed facts on the amount of volumes harvested by the oil and gas companies,” said Broderick in an email.

Broderick added that in 2010, there were reports that the industry was harvesting as much as 13 million cubic meters of timber.

Given the remoteness of the location, it’s not economically viable for many companies to truck the timber to a processing mill; there’s no mill north of Fort St. John. The B.C. Oil and Gas Commission’s Fibre Utilization Plan allows companies to burn, bury or use the timber at their discretion.

“In many cases, companies will burn or bury the timber, as it is not economical for the company to get the merchantable timber to a processing facility,” said Broderick.

Natural gas development isn’t universally hated in northeast British Columbia. Communities are grateful for the job opportunities, and First Nations have some negotiating power with industry and the Oil and Gas Commission (OGC), which regulates oil and gas development throughout the province.

The Canadian Association of Petroleum Producers, a lobbying group for the upstream Canadian oil and gas industry, wrote in a fact sheet that “solid relationships with aboriginal communities have created mutually beneficial employment and business opportunities.”

It gave an example of an LNG export plant planned for construction on First Nations land in Kitimat, British Columbia, in partnership with the Haisla First Nation.

What First Nation officials in Fort Nelson are particularly worried about is the isolated view of development projects, each proposed, permitted and approved independently, with no regard to their cumulative impacts.

“A project may not have a huge impact on caribou, so they come up with an environmental assessment that not much needs to be done,” said Adam Kamp, major projects coordinator for Fort Nelson’s land and resources department. “But if you add projects on top of it, it makes a bad situation worse.”

The OGC can place conditions on an approved application to specifically enforce animal protection, said Hardy Friedrich, OGC communications manager, in an email. He added that the OGC proactively monitors wildlife as part of its commitment to environmental management and protection.

“There is a comprehensive review done when industry wants to build natural gas infrastructure, and the OGC carefully reviews infrastructure applications to ensure wildlife is not disrupted,” said Friedrich.

The Ministry of Health is also undertaking a health assessment related to oil and gas activities in the area, Friedrich said.

‘Orwellian’ emissions

The tenuous negotiating history between the Treaty 8 First Nation tribes and the provincial government dates back to the territory’s inception. The Treaty 8 territory was formed through a series of treaties protecting sovereignty and land use, treaties that the First Nations claim have been systematically ignored and reinterpreted. The current, disputed interpretation of the treaties allows the government to permit oil and gas development in Treaty 8 territory, in consultation with the First Nations.

Provincewide, natural gas politics are much less heated. British Columbia is pushing several green energy initiatives related to transportation and homeownership, and the province even has a functioning carbon tax.

Indeed, most political anxiety around LNG development involves its potential to permanently sink the province’s attempts to reach its ambitious emissions targets: 33 percent below 2007 levels by 2020, and 80 percent below 2007 levels by 2050.

British Columbia’s two main parties, the ruling Liberals and the opposition New Democratic Party (NDP), are both officially in favor of exporting LNG, however.

“I think there’s obviously a huge opportunity in terms of bringing money into the province and bringing in jobs,” said Spencer Chandra Herbert, the NDP’s environment critic. “But there’s a very real possibility that government may not meet its targets if they continue this path without huge reductions elsewhere.”

In an email, the British Columbia Ministry of Environment said that between 2007 and 2010, the province’s greenhouse gas emissions decreased 4.5 percent, while its gross domestic product growth was higher than the Canadian average, adding that the government is “working to ensure that LNG operations in B.C. are the cleanest in the world.”

Last week, the British Columbia government presented a report to the United Nations indicating its emissions targets, with an almost 6 percent decline in emissions since 2007, according to the Canadian Press.

The province’s 2010 Clean Energy Act, which requires at least 93 percent of the electricity in British Columbia to come from “clean or renewable resources,” also could have obstructed LNG development that can involve burning natural gas. But the provincial government side-stepped the issue by passing what Kathryn Harrison, a political science professor at the University of British Columbia, called an “Orwellian” legal adjustment: that the Clean Energy Act be revised to allow natural gas burned to power LNG exports as “clean energy.”

“We’ve redefined burning a fossil fuel, for this purpose, as clean energy,” Harrison said.

The government has maintained that LNG exports will generate untold jobs and revenue for the province, while shifting Asia off dirty coal and onto cleaner natural gas. With the United States, Australia and China also developing LNG exports, Harrison said, both these claims have yet to hold water.

“There’s questions about both what will be the relative demand in coming years for different fuels and also what’s the supply, which is going to be based on what governments are rushing to embrace this resource,” she said.

Not ‘jobs at any cost’

One person hoping for the safe arrival of LNG development in British Columbia is Jack Mussallem, mayor of the coastal town Prince Rupert, population 11,838. Mussallem said he’s been dealing with an LNG “gold rush.”

Prince Rupert has been enduring a decade of economic distress, according to Mussallem. The town’s vital fisheries industries have suffered, and the town lost 700 jobs when the town pulp mill closed. Now, there are two proposed LNG plants in the Prince Rupert area, with final approval expected by the end of 2014. Four other projects were proposed for the British Columbia coast as of last month, according to the provincial government.

The two plants would bring an estimated 3,000 permanent jobs to Prince Rupert, said Mussallem, and 7,000 temporary construction jobs for three to four years.

But while Mussallem is hoping the two LNG plants slated for construction around Prince Rupert will go ahead, he said the decision won’t be a matter of “jobs at any cost.”

“From the community’s point of view, our interest is in growing jobs with minimal amount of compromise to the environment and minimal amount of disruption to the community,” he said.

So far, Prince Rupert seems to be enjoying a different relationship with the natural gas industry than Fort Nelson and other Treaty 8 First Nations contending with a madcap rush to extract gas.

“They’ve certainly helped the community, and we’re very appreciative they came. They asked us; they developed dialogue with us,” said Mussallem.

“The liquefied natural gas industry has been very open, very transparent,” he added, “and that’s very much appreciated.”

An already stretched workforce

Should these LNG plants go up, officials in Fort Nelson aren’t sure they would be able to handle the corresponding stampede to pipe the region’s natural gas to the coast.

“We’re stretched,” said Kamp. “If it picks up more, we might have issues, even more capacity issues than we already have.”

For now, the coastal LNG projects will not be approved until next year. Lowe hopes to use the time to develop comprehensive water licensing and land-use planning agreements with the OGC.

Even if First Nations had enough of a workforce to conduct their own oversight, they would still have to contend with the OGC, which has come under criticism recently for a lack of transparency in reporting drilling site deficiencies, according to the Vancouver Sun.

Harrison said natural gas development in northern British Columbia has managed to escape notice, however, thanks to its relative cleanness compared to oil. The majority of British Columbia’s population is also in the southwestern Vancouver area, more than 900 miles from Fort Nelson.

“The imagery of a gas leak isn’t so evocative,” she said. “Christy Clark herself said something like, ‘You’ve never seen a bird wash up on shore covered in natural gas.’”

Harrison, for one, worries not only about the short-term environmental impact of LNG development, but also about the long-term one.

“The question for me,” she said, “is do we still have time to rely on natural gas when that would lock us into that fuel, while cleaner, for decades to come?”

You can return to the main Market News page, or press the Back button on your browser.