Editorial: LNG players need aboriginal answers

The treaty claims industry is more than a First Nations financial burden

The federal government and anyone else wagering on liquefied natural gas will need far more than optimism to cash in at B.C.’s high-stakes LNG table.

Federal Natural Resources Minister Greg Rickford was in Vancouver recently to reassure British Columbians that the Conservative government remains committed to ensuring that the major players still in the game establish at least one LNG export facility on the west coast. Like the provincial government, Ottawa deserves points for fanning those flames of optimism.

In February, the federal government increased the capital cost allowance rate for LNG plants to 30% from 8%, which one analyst told Business in Vancouver translates to a $700 million tax deferral on a typical $10 billion LNG project. That’s a significant incentive. But incentives will go only so far in the wider world of depressed oil prices.

The province also faces another wild card unique to B.C.: uncertainty over aboriginal involvement and land claims. As illustrated by the controversy over the provincial government’s 11th-hour about-face on the appointment of former Liberal cabinet minister George Abbott as the BC Treaty Commission’s new chief, B.C.’s aboriginal land claims process remains dysfunctional.

Since B.C.’s treaty process was established in 1993, $627 million has been invested in concluding just eight treaties. Federal government special adviser Doug Eyford’s A New Direction: Advancing Aboriginal and Treaty Rights also points out that B.C. native bands now have an accumulated treaty negotiation debt load of approximately $500 million.

The treaty claims industry is more than a First Nations financial burden. It discourages international investment in B.C.

As outlined in EY’s Competing in the Global LNG Market report, gaining First Nations support is one of five critical competitive factors facing Canadian LNG projects.

Failure to secure that support will trump government optimism and incentive – no matter how generous – when it comes to international resource development megaprojects.