A small liquefied natural gas plant in Squamish B.C. will cost $1.4 billion to $1.8 billion to build, but the value it will return to the Squamish First Nation could almost equal that amount over the life of the project.
The Squamish First Nation has confirmed a story from the theBreaker that put the potential value of benefits agreements signed by the Squamish with Woodfibre LNG at more than $1 billion.
The Squamish Nation council voted 8-6 to approve benefits agreements with three parties – Woodfibre LNG, the provincial government and FortisBC – that includes $225.7 million in cash and nine parcels of land totaling 422 hectares.
“Communities are sometimes faced with difficult decisions and it is recognized that this was a difficult decision for many,” Khelsilem, an elected councillor and spokesperson for the Squamish Nation, said in a news release.
“Next steps will be holding the proponents accountable for the life of the project and beyond.”
That includes “co-developing management plans for the project and will have our own monitors on the ground to report any non-compliance with environmental, cultural, employment, and training conditions.”
The agreement with the Squamish was one of many outstanding issues for the project.
The company behind Woodfibre LNG, Indonesia’s Pacific Oil & Gas Ltd., has already given the project a notice to proceed. The company has offtake agreements signed with Asian buyers and gas supply agreements with producers in northeastern B.C.
“All the pieces are there,” said Byng Giraud, Woodfibre LNG’s corporate affairs manager. “The public policy issues are addressed, the indigenous communities are giving their consent, so there’s not much left to do except to grind the contractors on some price.”
The provincial government will not confirm how much of the land is provincial Crown land. Business in Vancouver is told that all three parties are contributing to the land parcels.
Of the $225.7 million in cash payments, $18.75 million will be made on achieving certain milestones. The first payment will come when the agreements are formally signed.
Other milestone payments will be made at the start of construction and at commissioning.
The cash payments include targeted payments of $19.1 million, with $3 million earmarked for a cultural fund, and $16.1 million for employment opportunities including training and education.
The rest will be paid to the Squamish in yearly installments over the project’s 40-year life.
For all intents and purposes, the Squamish are being treated like equity partners, but without owning equity, although there is an option for that too. The Squamish will have the option to take up to 5% stake in the project.
Some of the money will flow before construction starts to provide the education and training to give Squamish Nation members the skills they will need to work on the project, both during construction and post-construction.
The project is expected to generate 650 jobs at peak construction, and about 100 permanent jobs, once in operation.
But the project will be competing with other large construction projects, including Site C dam and LNG Canada, so there are some benefits to trying to recruit as many workers for the local community as possible through education and training.
Squamish businesses and contractors will be eligible for up to $872 million in contracts for both the construction and operational phases.
Giraud said work on site is expected to begin sometime next summer.
“You will probably see some low-end construction over the summer, getting more serious in the fall and then seriously in 2020,” Giraud said.