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B.C. First Nation buying ‘ready-to-go’ natural gas pipeline to supply LNG project

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Eva Clayton, president of the Nisga’a Lisims Government, speaks during a homecoming celebration for the House of Ni’isjoohl memorial totem at the Nisga’a Nation, in Laxgalts’ap, B.C., Friday, Sept. 29, 2023. CP Images photo

From the Canadian Energy Centre

By Will Gibson

‘It is an opportunity for us to create a better quality of life for our children and grandchildren’

Momentum continues building for Indigenous-led Canadian liquefied natural gas (LNG), with a second project securing a pipeline connection.

The Nisga’a Nation, a small coastal community near B.C.’s border with Alaska, announced earlier this month it will purchase TC Energy’s Prince Rupert Gas Transmission project along with partner Western LNG.  

It’s a turning point for the proposed Ksi Lisims LNG project, particularly because the pipeline has all the permits it needs to go ahead, said market analyst Ian Archer.  

Rendering of the proposed Ksi Lisims floating LNG project. Image courtesy Ksi Lisims LNG

“Buying this asset, a permitted and ready-to-build natural gas pipeline, puts control in the hands of the project’s partners,” said Archer, S&P Global’s associate director for gas, power and climate solutions. 

“The Nisga’a Nation and Western LNG now have control over the timeline and development of their proposed development. It’s a great day for them and the LNG industry in B.C.” 

The purchase comes after years of uncertainty for the proposed 900-kilometre pipeline, which would run from Hudson’s Hope in northeast B.C. to Lelu Island, near Prince Rupert.  

It was originally supposed to supply the $36-billion Pacific NorthWest LNG project, which was cancelled in 2017. 

In 2014, the Nisga’a Nation signed an agreement for construction of the pipeline through its traditional lands. Today, Nisga’a president Eva Clayton says becoming an owner of the project ensures it will provide even greater benefits.  

“This means more training, more priority hiring, more contracts and procurement for our workers and businesses, and more investment in our nation,” Clayton said.  

“It is a historic development, and an opportunity for us to create a better quality of life for our children and grandchildren here in the Nass – and for First Nations all along the pipeline route.”  

Ksi Lisims is a proposed floating facility with capacity to export 12 million tonnes of LNG per year. It is owned by the Nisga’a Nation, Western LNG, and Rockies LNG – a consortium that includes some of Canada’s largest natural gas producers.

Archer, who has spent more than 20 years analyzing the energy sector, sees the partnership as a template for the future. 

“The trend now is Indigenous participation in energy developments is seen as a given as opposed to just engagement or consultation with communities,” he says.  

“There is a recognition by both energy producers and Indigenous communities that they have a vested interest in exploring and participating in partnerships to responsibly develop oil and gas and build critical infrastructure to support that. That trend will continue to grow because it makes sense for everybody.” 

Map of the Prince Rupert Gas Transmission line. Courtesy Impact Assessment Agency of Canada

The momentum is building for Ksi Lisims – which also recently signed on Shell as a long-term LNG buyer and filed its regulatory application for an environmental certificate – hot on the heels of Cedar LNG, another Indigenous-led project on the B.C. coast.  

Cedar LNG, owned jointly by the Haisla Nation and Pembina Pipeline Corporation, has regulatory approval to proceed and is preparing for construction to start. A final investment decision is expected by the middle of this year.  

Cedar’s pipeline is already in the ground. It will be served by Coastal GasLink, a 670-kilometre pipeline from northeast B.C. to Kitimat that was completed late last year 

The project was built primarily to feed the LNG Canada terminal, which is now more than 85 per cent complete 

Less than a kilometre of connecting pipeline – called Cedar Link – would need to be built to get gas flowing to the Indigenous-owned Cedar LNG project.  

Given the appetite for LNG for potential customers in Asia (expected to drive a nearly 70 per cent increase in global demand through 2040), Clayton sees Ksi Lisims as key for providing opportunities for her community.  

For far too long, First Nations could only watch as others built generational wealth from the resources of our traditional lands. But times are changing. Our ownership role in this pipeline signals a new era for Indigenous participation in Canada’s economy.” 

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Canadian Energy Centre

Trans Mountain completion shows victory of good faith Indigenous consultation

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Photo courtesy Trans Mountain Corporation

From the Canadian Energy Centre

By Joseph Quesnel

‘Now that the Trans Mountain expansion is finally completed, it will provide trans-generational benefits to First Nations involved’

While many are celebrating the completion of the Trans Mountain pipeline expansion project for its benefit of delivering better prices for Canadian energy to international markets, it’s important to reflect on how the project demonstrates successful economic reconciliation with Indigenous communities.

It’s easy to forget how we got here.

The history of Trans Mountain has been fraught with obstacles and delays that could have killed the project, but it survived. This stands in contrast to other pipelines such as Energy East and Keystone XL.

Starting in 2012, proponent Kinder Morgan Canada engaged in consultation with multiple parties – including many First Nation and Métis communities – on potential project impacts.

According to Trans Mountain, there have been 73,000 points of contact with Indigenous communities throughout Alberta and British Columbia as the expansion was developed and constructed. The new federal government owners of the pipeline committed to ongoing consultation during early construction and operations phase.

Beyond formal Indigenous engagement, the project proponent conducted numerous environmental and engineering field studies. These included studies drawing on deep Indigenous input, such as traditional ecological knowledge studies, traditional land use studies, and traditional marine land use studies.

At each stage of consultation, the proponent had to take into consideration this input, and if necessary – which occurred regularly – adjust the pipeline route or change an approach.

With such a large undertaking, Kinder Morgan and later Trans Mountain Corporation as a government entity had to maintain relationships with many Indigenous parties and make sure they got it right.

Trans Mountain participates in a cultural ceremony with the Shxw’ōwhámél First Nation near Hope, B.C. Photograph courtesy Trans Mountain

It was the opposite of the superficial “checklist” form of consultation that companies had long been criticized for.

While most of the First Nation and Métis communities engaged in good faith with Kinder Morgan, and later the federal government, and wanted to maximize environmental protections and ensure they got the best deal for their communities, environmentalist opponents wanted to kill the project outright from the start.

After the government took over the incomplete expansion in 2018, green activists were transparent about using cost overruns as a tactic to scuttle and defeat the project. They tried to make Trans Mountain ground zero for their anti-energy divestment crusade, targeting investors.

It is an amazing testament to importance of Trans Mountain that it survived this bad faith onslaught.

In true eco-colonialist fashion, the non-Indigenous activist community did not care that the consultation process for Trans Mountain project was achieving economic reconciliation in front of their eyes. They were “fair weather friends” who supported Indigenous communities only when they opposed energy projects.

They missed the broad support for the Trans Mountain expansion. As of March 2023, the project had signed agreements with 81 Indigenous communities along the proposed route worth $657 million, and the project has created over $4.8 billion in contracts with Indigenous businesses.

Most importantly, Trans Mountain saw the maturing of Indigenous capital as Indigenous coalitions came together to seek equity stakes in the pipeline. Project Reconciliation, the Alberta-based Iron Coalition and B.C.’s Western Indigenous Pipeline Group all presented detailed proposals to assume ownership.

Although these equity proposals have not yet resulted in a sale agreement, they involved taking that important first step. Trans Mountain showed what was possible for Indigenous ownership, and now with more growth and perhaps legislative help from provincial and federal governments, an Indigenous consortium will be eventually successful when the government looks to sell the project.

If an Indigenous partner ultimately acquires an equity stake in Trans Mountain, observers close to the negotiations are convinced it will be a sizeable stake, well beyond 10 per cent. It will be a transformative venture for many First Nations involved.

Now that the Trans Mountain expansion is finally completed, it will provide trans-generational benefits to First Nations involved, including lasting work for Indigenous companies. It will also demonstrate the victory of good faith Indigenous consultation over bad faith opposition.

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Alberta

Game changer: Trans Mountain pipeline expansion complete and starting to flow Canada’s oil to the world

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Workers complete the “golden weld” of the Trans Mountain pipeline expansion on April 11, 2024 in the Fraser Valley between Hope and Chilliwack, B.C. The project saw mechanical completion on April 30, 2024. Photo courtesy Trans Mountain Corporation

From the Canadian Energy Centre

By Will Gibson

‘We’re going to be moving into a market where buyers are going to be competing to buy Canadian oil’

It is a game changer for Canada that will have ripple effects around the world.  

The Trans Mountain pipeline expansion is now complete. And for the first time, global customers can access large volumes of Canadian oil, with the benefits flowing to Canada’s economy and Indigenous communities.  

“We’re going to be moving into a market where buyers are going to be competing to buy Canadian oil,” BMO Capital Markets director Randy Ollenberger said recently, adding this is expected to result in a better price for Canadian oil relative to other global benchmarks. 

The long-awaited expansion nearly triples capacity on the Trans Mountain system from Edmonton to the West Coast to approximately 890,000 barrels per day. Customers for the first shipments include refiners in China,  California and India, according to media reports.  

Shippers include all six members of the Pathways Alliance, a group of companies representing 95 per cent of oil sands production that together plan to reduce emissions from operations by 22 megatonnes by 2030 on the way to net zero by 2050.  

The first tanker shipment from Trans Mountain’s expanded Westridge Marine Terminal is expected later in May.

Photo courtesy Trans Mountain Corporation

 The new capacity on the Trans Mountain system comes as demand for Canadian oil from markets outside the United States is on the rise.  

According to the Canada Energy Regulator, exports to destinations beyond the U.S. have averaged a record 267,000 barrels per day so far this year, up from about 130,000 barrels per day in 2020 and 33,000 barrels per day in 2017. 

“Oil demand globally continues to go up,” said Phil Skolnick, New York-based oil market analyst with Eight Capital.  

“Both India and China are looking to add millions of barrels a day of refining capacity through 2030.” 

In India, refining demand will increase mainly for so-called medium and heavy oil like what is produced in Canada, he said. 

“That’s where TMX is the opportunity for Canada, because that’s the route to get to India.”  

Led by India and China, oil demand in the Asia-Pacific region is projected to increase from 36 million barrels per day in 2022 to 52 million barrels per day in 2050, according to the U.S. Energy Information Administration. 

More oil coming from Canada will shake up markets for similar world oil streams including from Russia, Ecuador, and Iraq, according to analysts with Rystad Energy and Argus Media. 

Expanded exports are expected to improve pricing for Canadian heavy oil, which “have been depressed for many years” in part due to pipeline shortages, according to TD Economics.  

Photo courtesy Trans Mountain Corporation

 In recent years, the price for oil benchmark Western Canadian Select (WCS) has hovered between $18-$20 lower than West Texas Intermediate (WTI) “to reflect these hurdles,” analyst Marc Ercolao wrote in March 

“That spread should narrow as a result of the Trans Mountain completion,” he wrote. 

“Looking forward, WCS prices could conservatively close the spread by $3–4/barrel later this year, which will incentivize production and support industry profitability.”  

Canada’s Parliamentary Budget Office has said that an increase of US$5 per barrel for Canadian heavy oil would add $6 billion to Canada’s economy over the course of one year. 

The Trans Mountain Expansion will leave a lasting economic legacy, according to an impact assessment conducted by Ernst & Young in March 2023.  

In addition to $4.9 billion in contracts with Indigenous businesses during construction, the project leaves behind more than $650 million in benefit agreements and $1.2 billion in skills training with Indigenous communities.   

Ernst & Young found that between 2024 and 2043, the expanded Trans Mountain system will pay $3.7 billion in wages, generate $9.2 billion in GDP, and pay $2.8 billion in government taxes. 

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