August 5, 2014 BC Chamber Public Affairs Update

Federal Minister of Aboriginal Affairs Bernard Valcourt has appointed special representative on West Coast energy issues Douglas Eyford to ‘renew and reform’ a comprehensive treaty process. The proposed changes would see the federal government adopt a more flexible approach to treaties. That includes negotiating smaller, incremental treaties and signing agreements outside the formal treaty process where possible. Other proposed changes include:

• clearer standards on how government and industry meet their Supreme Court of Canada-mandated duty to consult First Nations on project proposals;
• federal facilitation of shared territory disputes between First Nations related to major resource development projects; and
• ending the clawback of federal transfers for health, education and social development based on a First Nation government’s own sources of revenue.

Apache CEO Steven Farris said LNG’s high up-front capital costs and long-range return on investment drove the company to rethink its involvement. “It makes sense for someone else to own it that has a different time horizon than we do,” he said. He also said that Kitimat LNG remains a strong, viable project, and the project will retain its value in spite of Apache’s decision.

Kitimat LNG is considered BC’s most advanced LNG project. Key environmental approvals and agreements with First Nations are in place and site preparations in Kitimat are under way.

Shifts in ownership structure like this are to be expected, Premier Christy Clark said. She expressed confidence that B.C.’s push for an LNG sector will succeed.

Apache’s 50-50 partner in the Kitimat LNG project is Chevron. Under the current arrangement, Chevron would operate an LNG facility in Kitimat and the Pacific Trails Pipeline while Apache would provide gas from its shale gas holdings in the Horn River and Liard Basins in northeastern B.C. Chevron is considering its options following Apache’s announcement.

The Regional District of Kitimat-Stikine, the City of Terrace, the Districts of Kitimat, Stewart and New Hazelton, and the Village of Hazelton have come together to form the Northwest BC Resource Benefits Alliance (RBA). Leaders say the RBA will start negotiating revenue-sharing agreements with the B.C. government to make sure their communities get their fair share of revenue from the $100-billion worth of proposed LNG projects and other resource development in their region.

The RBA says their communities will need to invest to support LNG and other resource development. They will need to provide government services and laws, foster economic, social and environmental well-being, and ensure resources are developed in ways that support the long-term sustainability of communities.

The RBA says it is looking at a number of potential benefit sharing models. That includes: revenue sharing by industrial sector and project; new long term and improved government grant programs; a fair share of industrial tax revenue from the tax base outside municipal boundaries; and bilateral agreements with major companies.

This weekly report produced for the BC Chamber of Commerce by Fleishman-Hillard.  While every effort has been made to ensure the accuracy of the information included in this publication as of the date of issue, events and government policies are subject to frequent change.  Therefore, the BC Chamber of Commerce and Fleishman-Hillard cannot assume any responsibility for actions taken solely or principally on the basis on the information contained herein.