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First Nations Gains Interest in British Columbia Pipeline

British Columbia (BC), First Nations and the natural gas industry have struck an agreement to allow First Nations participation in a gas pipeline being developed to serve a proposed liquefied natural gas (LNG) liquefaction and export terminal near Kitimat, BC.

The agreement assists First Nations in securing a direct interest in Pacific Trail Pipelines LP (PTP), which is developing a proposed 463 km (288 miles) gas pipeline from Summit Lake to Kitimat (KSL project) costing an estimated C$1.2 billion. The KSL project will enable PTP to transport gas from Summit Lake to Kitimat LNG Inc.'s proposed LNG export terminal and will be the first major pipeline constructed in that part of the province in more than 40 years.

"This project is an excellent example of how government, communities and industry can work together to help create economic development activities," said Blair Lekstrom, BC energy, mines and petroleum resources minister. "This agreement provides the means for First Nations to develop a long-term, mutually beneficial partnership with industry."

PTP is a 50/50 partnership of Pacific Northern Gas Ltd. and Galveston LNG Inc., the parent company of Kitimat LNG Inc. Both the terminal and the KSL project have received the required provincial and federal environmental assessment approvals and are now working to finalize commercial arrangements (see Daily GPI, March 18).

First Nations along the pipeline will receive C$3 million as an incentive for the ratification process and a further C$32 million that ensures First Nations have an equity position in the Pacific Trail Pipelines' project.

"In view of a rapidly changing global economy and First Nations desires to advance their social and economic position, First Nations leadership have structured a landmark agreement with BC and PTP," said David Luggi, Carrier Sekani Tribal Chief. "First Nations have channeled their right to use and occupation of land into nation-building investments in the mainstream economy. Investment in the Pacific Trail Pipelines' project is testimony that industry, First Nations and government can work together on projects that will result in financial returns, gainful employment and associated opportunities that will benefit First Nations communities for generations to come."

Earlier this year Mitsubishi Corp. acquired capacity in the LNG terminal as well as a minority interest in the project (see Daily GPI, Jan. 14). The terminal project was originally conceived as an LNG regasification facility, but changing global LNG market dynamics caused developers to rethink their plans and target Asian markets with LNG from Western Canada (see Daily GPI, Dec. 12, 2008; Dec. 1, 2008; Sept. 23, 2008).

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