(Reuters) – A Canadian aboriginal community that has partnered with Steelhead LNG on a proposed major liquefied natural gas export terminal plans to decide within months whether to take an equity stake in the $30 billion project, one of its leaders said.
The Huu-ay-aht are working with the Vancouver-based company on the planning and design of the 24 million tonne per year plant on their land in British Columbia.
“In order to be full partners in a business sense, you have to actually be full partner in the pony-up-the-money sense,” councillor John Jack told Reuters at the group’s office in Port Alberni on Vancouver Island. “That’s a challenge we’re looking at solving.”
Raising the billions needed to take a meaningful stake in the LNG facility will not be an easy feat for the community, which operates a few small businesses including a forestry company and a restaurant.
But even if the self-governing Huu-ay-aht do not take an equity stake, they own the land around the proposed terminal site and stand to profit from its lease, taxation and other yet-to-be negotiated benefits.
Steelhead is backed by KERN Partners, a closely held Calgary-based private equity firm. As reported by peHUB Canada last July, Steelhead was the debut investment of KERN’s latest fund, KERN Energy Partners IV Fund, which is targeted to raise $750 million.
While the project benefits from strong aboriginal support, it does face challenges. Located on the remote western side of Vancouver Island, a long and expensive pipeline is needed to ship gas to the proposed site.
While preliminary environmental and engineering work is underway, a final investment decision is not expected until 2018. That puts the project behind other major developments in the race to build Canada’s first LNG plant.
The project, one of 19 LNG export plants proposed for British Columbia’s coast, is unique in that Steelhead came to the Huu-ay-aht at the start, creating a joint panel of councillors and company executives to oversee development.
By contrast, most resource companies design projects first and then present plans to aboriginal groups, who often end up feeling their input has no value.
If the economics prove favorable, the Huu-ay-aht say their community will still need to decide whether the benefits outweigh the long-term social and environmental impacts of a massive industrial development.
“We’re definitely prepared to say ‘no’ to the project,” said Jack. “But that’s only half of it. If we think there’s an opportunity there, we’re almost obligated to be just as prepared to say ‘yes.'”
By Julie Gordon
(Editing by Jeffrey Hodgson and Leslie Adler)
(This story has been edited by Kirk Falconer, editor of peHUB Canada)
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