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Kitamaat Village, B.C. – On the north side of Douglas Channel, a quick boat ride from the Haisla Nation’s town site, an old log dumpsite covered by forest is awaiting transformation as the first liquefied natural gas (LNG) export site on Canada’s West Coast.
While surveying the band-owned oceanfront location from a fishing boat, chief counselor Ellis Ross pondered the massive work ahead.
“We are not prepared for all the tanker traffic,” said the 48-year-old Aboriginal leader, donning a dark business suit and wingtip dress shoes, markers of his new role in the energy world, while checking a fishing net for crabs.
“We don’t even have docks for tugs and barges. We’ll need to sit down with governments and proponents, look at the impacts and come up with a framework.” Two years from now, as long as market conditions and financing terms remain supportive, the Haisla’s partly owned BCLNG project will be loading for the first time British Columbia natural gas into tankers headed for Asia from a floating platform moored next to land-based facilities.
The project is one of three planned for the coast near Kitimat, and one of nine announced for Northern British Columbia so far. The LNG opportunity emerged out of the blue three years ago after the tsunami and nuclear disaster in Japan triggered a rush by Asian countries to secure natural gas from Western Canada as a backup fuel.
With LNG proponents making grand announcements in recent months involving dozens of billions in spending, communities like Kitimat, Prince Rupert and others in the vicinity are preparing for the boom.
But they are also worried about the uncertainties of the business and the lack of visible progress on the ground.
“Generally, nothing has happened,” said Bill Eynon, president of the K.T. Industrial Development Society, a group promoting business development in the area. “There is skepticism. I have seen corporations pull out of developments after spending hundreds of millions because the economics didn’t seem right.”
The big danger to LNG plans?
“The price of gas could go up,” says Mr. Eynon, who is retired but has had plenty of experience with natural gas price volatility when he was the general manager of the town’s Methanex Corp. plant. The methanol export facility was conceived in the mid-1970s when the price of natural gas, used as feedstock, was under $2 per thousand cubic feet, and was shut down in 2006, when gas was near $12.
In addition to energy security, low Western Canadian gas prices are the other top reason behind the LNG rush, backed up by abundant deposits in Western Canada and proximity to Asia that makes transportation cheaper.
Kitimat, an industrial town of 9,000 residents built in the 1950s at the head of the channel by the Aluminum Co. of Canada (Alcan), had its share of disappointments.
Methanex, West Fraser Timber Co. Ltd., Eurocan Pulp & Paper, an LNG import terminal that was revived as an export facility and is now part of the Chevron Corp.-led project, were some of the commodity-based enterprises that pulled out over the years, leaving the local economy in shambles.
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