First Nations and bands on whose territory activities related to the LNG Canada project occur are poised to earn millions of dollars from the project thanks to a series of agreements with the provincial government.
Depending upon the details in the agreements, territories along the length of the Coastal GasLink pipeline, around LNG Canada’s facility in Kitimat and along the transport routes of LNG-carrying tankers will receive financial benefits, titles to lands and a form of ongoing royalty payments once super-cooled natural gas begins to be shipped to customers overseas.
The agreements specific to LNG Canada were negotiated between five First Nations and an umbrella First Nation group called the Coastal First Nation between 2016 and 2017.
In each agreement, lump sums were paid once the agreements were signed with more lump sums to be paid annually based on LNG Canada’s Oct. 2 announcement it was proceeding with its $40 billion Kitimat project.
The latter payments are one-time cash transfers, triggered by any one of nine LNG projects listed in the agreements being the first to make a final investments decision which in this case is the LNG Canada project.
The cash and property transfers recognize the territorial and marine aboriginal interests of the First Nations based on the location of LNG plants and the transport routes of LNG-carrying tankers.
In return, the First Nations have signalled their support of a northwestern LNG industry and have promised not to interfere with the development of any LNG project.
Revenue to finance the agreements will come from the provincial government’s coffers supported through its own taxation measures arising from the LNG Canada project.
Area First Nations governments are not the only local governments to benefit from LNG Canada. Because the plant is within the District of Kitimat boundaries it is subject to municipal property taxation amounting to as much as $9.7 million a year once the plant is in full production.
As well, First Nations along the Coastal GasLink pipeline route also negotiated lump sum agreements with the province based on construction progress as well as sharing $10 million a year beginning when the pipeline is under construction.
There are also inflationary increases built into the agreements.
Here’s a breakdown by First Nation:
Kitselas First Nation
To date the Kitselas First Nation has negotiated one of the largest of the LNG benefits deals with the provincial government tied to LNG Canada.
In support of the Coastal GasLink pipeline, the one that will feed the LNG Canada plant at Kitimat, the Kitselas signed a deal in 2014 providing a first payment of $575,000 once construction begins, a further $575,000 when the line goes into service, an additional $230,000 and a share of $10 million a year for First Nations along the pipeline route for every year the pipeline is in service.
A more lucrative deal was signed just last year tied to either LNG Canada or Kitimat LNG, the other major LNG project planned at Kitimat, providing 25 hectares of provincial land at the corner of Hwy16 and the entrance road to the Northwest Regional Airport, $350,000 as a legacy payment for either LNG Canada or Kitimat LNG, $250,000 to plan a new community hall to replace the aging one at its Queensway reserve, and $500,000 as a legacy payment in recognition of other LNG projects.
When LNG Canada announced its final investment decision in early October, the Kitselas received an additional $1 million and $2 million toward construction of a community hall.
Based on the start of LNG Canada construction, a further $1 million is now due the Kitselas and $6.5 million regarded as a legacy or capacity payment in recognition of other LNG projects.
In addition to the land at the airport, when LNG Canada announced its final investment decision, the Kitselas are eligible for a further 62 hectares of provincial Crown land in lower Thornhill, a mostly forested section bounded by Paquette to the south, Century St. to the west, the Pacific Northern Gas pipeline to the east and north to behind the old Lomak depot location.
The Kitselas also have the opportunity to acquire more land, 1,140 hectares, based on LNG Canada’s construction start. This land, in two sections, is located in the Dubose Flats area to the right of Hwy37 South toward Kitimat from Terrace and just south of Lakelse Lake.
The Dubose area has figured over the decades in a variety of development proposals ranging from an aluminum smelter by Alcan (now Rio Tinto) to a pulp mill.
The provincial government, in response to a query, says the Kitselas have formally asked for the airport land but that the transfer has yet to be completed.
“Significant work is required, including consultations with First Nations, prior to the transfer being complete,” said the province.
The Kitsumkalum First Nation at Terrace and the Metlakatla and Lax Kw’alaams on the north coast also have territorial interests in the Terrace area, the province added.
In addition to the specific benefits tied to LNG Canada, the Kitselas are also signatories to a broader agreement called the Coastal Fund Agreement, also signed in 2017.
It calls for $500,000 a year for a guaranteed three years and, because LNG Canada was announced before March 31, 2019, a payment of $250,000. This latter payment is a one-time one based on the first LNG project to be announced in the region which, in this case, was LNG Canada.
The agreement also calls for $500,000 a year indexed to inflation as long as LNG is shipped in the area.
There’s also a form of an annual royalty payment based on LNG Canada’s final investment decision — .33 cents a tonne for the plant’s 14 million tonnes of LNG designed capacity — or $46,200 a year during construction.
This jumps to 2 cents per tonne once LNG begins to be shipped which, at a full capacity of 14 million tonnes a year, amounts to $280,000 a year.