From Resource Works

By Nelson Bennett

Ksi Lisims LNG too important to fail

The BC Environmental Assessment Office (EAO) is expected to soon determine whether the Prince Rupert Gas Transmission (PRGT) pipeline project has been “substantially started” as per the conditions of its provincial environmental certificate. Later this summer, the EAO is also expected to issue a recommendation on the Ksi Lisims LNG project, which would be supplied by the PRGT pipeline.

If these regulatory hurdles are cleared, the project is still likely to face court challenges, including judicial review applications from environmental groups and potentially the Gitanyow First Nation. The stakes are high: Ksi Lisims LNG represents a $20 billion investment and is a clean energy mega-project that the government of Premier David Eby cannot afford to lose, both in terms of economic development and reconciliation with Indigenous communities.

Should the EAO conclude that PRGT has not made a substantial start, the project’s environmental certificate would expire. The proponents—the Nisga’a Nation and Western LNG—would then be required to restart the environmental review process from scratch. This would result in years of delay and potentially hundreds of millions of dollars in additional costs. Timing is especially critical for LNG projects targeting Asian markets, where long-term supply contracts, often lasting 15 to 20 years, must align with project timelines. Ksi Lisims aims to be operational by 2029.

Petronas Energy Canada CEO Mark Fitzgerald recently told the Greater Vancouver Board of Trade that Canada has an 18-month window to move key projects forward or risk losing investment opportunities. This warning echoes past experience: in 2017, Petronas canceled the Pacific Northwest LNG project just one week after the NDP government took office, despite having invested nearly $1 billion. That decision resulted in the mothballing of the PRGT pipeline and signaled the collapse of other major LNG projects, including Kitimat LNG (Chevron), Aurora LNG (Nexen), WCC LNG (ExxonMobil), and Prince Rupert LNG (Shell). Many investors instead shifted their focus to the United States.

While previous cancellations were partially attributed to macroeconomic factors, these did not deter LNG investment in other jurisdictions. In contrast, Ksi Lisims LNG has recently gained momentum, with significant financial backing from Blackstone Energy Transition Partners, Shell, and TotalEnergies through private placements, off-take agreements, and planned equity stakes. However, investor confidence is fragile and can evaporate if the project becomes mired in regulatory or legal delays.

The PRGT pipeline received its original environmental certificate in 2014 with a five-year term, later renewed once. The Nisga’a Nation and Western LNG must now demonstrate that substantial construction has commenced to maintain that certification. According to Western LNG, work completed includes clearing 47 kilometers of right-of-way on Nisga’a treaty lands, constructing 42 kilometers of road, and building nine bridges. Whether this constitutes a “substantial start” is under review. Groups such as Ecojustice and the Gitanyow First Nation have submitted objections, arguing that it does not meet the threshold.

It is notable that the Gitanyow originally supported PRGT through impact benefits agreements with the province and project agreements with the previous proponent, TC Energy. However, their position shifted after ownership transferred to the Nisga’a Nation and Western LNG. The Gitanyow now argue the project has changed substantially, including a re-routing near the western terminus to accommodate the new Ksi Lisims LNG terminal, which is located further north than the originally planned Pacific Northwest LNG terminal.

Such disputes highlight why both federal and provincial governments have recently begun developing fast-tracking legislation for major infrastructure projects deemed to be in the national interest. These new legislative tools are intended to reduce bureaucratic delays and provide greater regulatory certainty. Ksi Lisims and PRGT meet many of the criteria such legislation is designed to support and would be strong candidates for such treatment should the EAO’s decision result in further delays.

Importantly, Ksi Lisims LNG is not simply a project supported by the Nisga’a Nation—it is being led by them. In addition, all other First Nations along the proposed pipeline route, except the Gitanyow, appear to support the project and are being offered equity participation. This makes Ksi Lisims a powerful example of reconciliation in action.

Furthermore, the project’s floating LNG design significantly reduces its terrestrial footprint and associated environmental impact, particularly on fish habitats. The proponents have also committed to using electricity to power the liquefaction process—when it becomes available—to align with British Columbia’s net-zero emissions targets. These factors support the classification of Ksi Lisims LNG as a clean energy project.

If this project does not meet B.C.’s environmental and social standards, it is difficult to imagine what project could. As Ellis Ross, the newly elected Conservative MP for Skeena–Bulkley Valley, recently stated, “It hits so many of the bullets that politicians have been talking about for so many years.”

If federal and provincial leaders are serious about supporting “nation-building” infrastructure, then Ksi Lisims LNG should be at the top of the list—particularly if the EAO process creates further complications. That said, proponents remain cautiously optimistic. “I don’t think the Nisga’a will give up,” Ross added. “I don’t think it will fail. But if it doesn’t get approved, it will have to incur more cost and more time.”