How Canada's Haisla become the first Indigenous LNG owner in the world

Maureen Nyce wore a hardhat and a safety vest during an August visit to Cedar LNG's pipeline site, not as a dignitary visiting or cultural emissary, but as the owner. Haisla, who have lived on Canada's Northwest Coast for over 9,000 years, own 50.1% of the $4 billion Cedar LNG export project in Kitimat. The remainder is owned by Calgary-based Pembina Pipeline. The world's first majority-Indigenous-owned LNG project, expected to be operational in 2028, could drastically change the future of Nyce's people and serves as a test case for Canada, which has just started exporting LNG to Asia and is trying to reduce export reliance on the United States.

Nyce, who became the chief of Cedar LNG in July, revealed that a few unique factors were required to bring Cedar LNG from idea to reality. She learned this during her first media interview. The project was able to benefit from the strategic use of existing facilities, community support that was almost unanimous, and a first-of its-kind, massive loan. This combination could be hard to duplicate as Canada, which is the fifth largest natural gas producer in world, tries to find a balance between Indigenous and economic rights.

Cedar LNG, however, was Indigenous from the start. In Canada energy partnerships with Indigenous groups tend to be initiated by industry. A 2018 agreement that granted the Haisla 400 million cubic feet of daily capacity on the 670 km Coastal GasLink pipe that brings natural gases to the larger Shell led LNG Canada facility was a crucial part. LNG Canada, which shipped Canada's very first LNG to Asia this year, is also located on Haisla territory. Shell and LNG Canada began consultations with Haisla in 2013 to secure Haisla's support for the project.

Many Haisla believed that the growth of the industry was inevitable, despite some initial concerns from the community, particularly in regards to the environment. Nyce explained that the Haisla people viewed it as a choice: "We can either get on board and ride along, or we can leave and fall behind." Leadership recognized a rare chance to invest in the community's future in an area where many people live below poverty level.

Dave LaVallie was the business development officer for the Nation at the time and urged the Council to insist on access to Coastal GasLink's shipping capacity.

Haisla then had the opportunity to find a partner in the private sector to build their own LNG plant. Pembina Pipeline looked for new opportunities after cancelling its Jordan Cove LNG Project in Oregon because of opposition from landowners. environmentalists, and Indigenous groups.

Stu Taylor said that Pembina senior vice president and corporate development officer, Stu Taylor, had assured Haisla early access to the pipeline as well as community support.

Taylor stated that "what boards and executive teams want is certainty." Taylor explained that the Haisla originally chose a smaller company, but Pembina won the bid after the Haisla realized their need for a bigger company with greater financial strength. In 2021 they signed a partnership deal, Pembina’s first equity deal with an Indigenous group. Taylor explained that they had "all the usual concerns". What are their capabilities, can they fund the project? How will you manage the joint venture? Does the community support the project?"

Pembina originally envisioned the Haisla as a minority owner, but "the Haisla had a vision from the beginning of being the majority owners," he stated.

Cedar LNG's board is made up of four Haisla directors, and four Pembina directors.

DIVISIVE ISSUES Mark Carney, Canadian Prime Minister, encourages the partnership with Indigenous Communities to help win regulatory approval for projects.

73% of Canada's 504 major energy and resource projects are located in or near Indigenous territories. In some cases, however, the fact that Indigenous people own equity in certain projects has not prevented opposition. Deals can still fail. According to a filing, the pipeline operator TC Energy TRP.TO terminated a deal in February to sell a minor stake in its Canadian Natural Gas Pipeline System to Indigenous Communities for C$1 Billion.

TC refused to explain why, and the communities didn't respond to requests for comments.

The Ksi-Lisims LNG project proposed by Houston's Western LNG, along with a group of Canadian gas producers and other natural gas producers is facing opposition from the local community.

The Nisga'a Nation purchased a stake in the pipeline that will supply Ksi Lisims. They support the project. Other Indigenous groups, such as the Gitanyow Chiefs, are opposed to the project. Last year, they blocked service roads in protest of the pipeline's construction across their traditional territory, and feared the impact on local salmon population. On September 15, the federal government approved Ksi Lisims, but the Gitanyow says they will continue to oppose the project and may even take it to court.

Tara Marsden is the sustainability director of the Gitanyow Hereditary Chiefs. She worries that industry proponents use Indigenous partnerships to give the impression of widespread social licence for their projects.

Marsden stated that "(LNG is) not universally supported and is a divisive topic for many people."

According to the law firm Fasken, there are 165 infrastructure and energy projects in Canada that are owned or partially owned by Indigenous Communities. 29% of these equity agreements have been announced in the past two years.

Haisla's team worked closely with Pembina to secure funding. The project will be funded 60% by a construction loan from a bank syndicate, and 40% through equity contributions. Nyce stated that the Haisla borrowed C$1.4billion from First Nations Finance Authority (a non-profit corporation controlled and owned by First Nation governments) to finance their share. The loan is the largest the FNFA issued up to now, and it's one of the biggest ever given to a First Nation.

In a vote of ratification last year, almost 93% of Haisla voted to borrow money for the project. Nyce refused to place a dollar amount on the revenue the Haisla are expecting from Cedar LNG. She stated that it would be at least 10 years before significant revenues are paid to the Haisla community instead of paying off debt.

She and the other council members have put plans in place for housing, education and training, health care and social support for community members.

"This is the territory we own." Nyce said, "We'll be here when this project is over."

(source: Reuters)