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The Petronas Project and the LNG Pipe Dream

by Ashley Zarbatany

Fracked Gas Pipelines
Fracked Gas Pipelines

Common sense suggests that any project which would devastate one of the largest and most fragile salmon estuaries in the world is short-sighted and ill-advised. However, the proposed Pacific Northwest Liquefied Natural Gas (PNW LNG) terminal would do just that. Instead of facing condemnation, it's being touted by the B.C. government as the province's most promising avenue towards economic success.


Christy Clark’s obsession

The B.C. government views the PNW LNG terminal as integral to its goal of becoming a petrol state through LNG exports. The project, with an expected $36-billion investment from its parent company, Malaysian state-owned, Petronas Corporation, is said to be the largest foreign investment ever made in Canadian history. While the government extols the benefits of an LNG economy, it ignores the destruction it will cause, and has stated it will go through with these projects regardless of opposition it has dismissed as “the forces of No.”

The reality is that B.C. is too late to get into the LNG market, which now has a long-term forecast of a world oversupply. Major economic players, such as Russia, Australia, and Qatar, have already developed infrastructure for LNG development; Russia has already signed a major export deal with China, solidifying its hold in the market. These players will put new B.C. exporters at a major disadvantage for years to come. Moreover, oil and gas prices’ plummet on the world market makes further investment into the industry untenable, or unrealistically optimistic.

While the B.C. government claims that the PNW LNG terminal is a great opportunity for oil and gas workers, the economics of competition in a flooded world market would likely result in lower wages and fewer benefits. The B.C. government’s gutting of environmental regulations, labour codes, and its disregard for collective bargaining rights have already created the conditions for this to take place.

While claiming that LNG exports will improve the economy, the B.C. government is offering major tax breaks and incentives to corporations, seducing investors at the expense of taxpayers. In their Project Development Agreement, signed in July, 2015, B.C. promised to compensate Petronas for any taxes they raise on the industry for a 25-year period, including taxes related to the LNG Income Tax, the Natural Gas Tax Credit, the Carbon Tax, and environmental charges related to any new greenhouse gas emissions regulations. Some of these taxes, such as the Natural Gas Income Tax, have already been halved to a post-payout tax rate of 3.5% and offer a reduction in corporate income tax from 11% to 8%.

In February, 2015 the federal government granted federal tax breaks to the B.C. LNG sector, with subsidized tax relief in effect for the next ten years. Analysts predict this increase in capital allowance rates could translate into a $4-billion subsidy for LNG companies by Canadian taxpayers. While the federal Liberal Party had promised to end subsidies to the fossil fuel industry, after winning the election they have since assured the B.C. government that they will not remove this tax cut.

While gas companies are allowed to burn their own natural gas for energy to power their projects – an allowance they were afforded in BC’s most recent Clean Energy Act – they are being offered subsidized electricity from the proposed Site C dam. The $9-billion dam project would destroy 30,000 acres of farmland in the Peace River Valley and is currently being fought by the Treaty 8 First Nations in court. Despite this, B.C. has already started the project.

Industrial users of BC Hydro typically pay less than half of what residential and small business customers pay. Since BC Hydro is a tax payer funded Crown Corporation, this amounts to another subsidy for the industry. The government’s hope to attract investors with significant freebies is not fair to the people who are footing the bill, and who have much to lose if these projects go through.


Petronas’ dirty record

Petronas cannot be trusted. Najib Razak, president of Petronas and Prime Minister of Malaysia, is accused of stealing $700-million from Malaysian taxpayers and of covering up $11-billion in debt. Razak's fiscal record discredits the dubious claim that taxpayers will recuperate the costs from these expensive government give-aways.

Moreover, Petronas has a long history of disregarding the environment and of perpetrating human rights abuses against Indigenous people in Indonesia. If allowed, the PNW LNG terminal will have a similar impact on the environment and on Indigenous communities in northern B.C.


It’s about fracking

Amidst these threats, in the background of the LNG debate looms the giant fracking elephant in the room; natural gas, despite industry’s claim, contributes to climate change and environmental degradation. Hydraulic fracturing, or fracking, is an environmentally devastating process by which natural gas, or fracked gas, is extracted from the earth. It requires the pressurized injection of water mixed with caustic (and often carcinogenic) chemicals into wellbores in order to fracture the earth and force gas or oil reservoirs stored deep underground to the surface.

Frackers have no control over where the toxic mixture goes once it is in the ground, nor whether it will push the fuel reservoirs up the same wellbore it went down.  In fact, Alberta’s Energy Regulator admits that as much as 80% of the toxic mixture remains underground, where it can leak through fissures, caused by the injection process, into surrounding aquifers. Depending on the size of an aquifer, these leaks can lead to the contamination of underground water sources hundreds of kilometers away from the drilling site.

In addition, fracking companies will often flare (burn) off excess chemicals and gases that return up the wellbore. This not only increases the amount of greenhouse gas emissions involved in the process, but the combustion involved can cause chemicals present to react and form dangerous gas clouds. Many ranchers, farmers, and rural residents who live nearby fracking sites have suffered the loss of their livestock and high rates of health complications.

In the Peace River region, which has been heavily exploited by the oil and gas industry, there has been a significant rise in the number of earthquakes it experiences due to fracking. While many people rely on the oil and gas economy in the region, they’ve done so at the expense of their health, and at the expense of their agricultural lands, some of which are the best in the world.

Fracking is a desperate and water-intensive attempt by industry to access the last drops of oil and gas resources available. It results in polluted aquifers, poisonous gas clouds, and dangerous earthquakes. While certain companies may profit off this process, it is at the expense of peoples’ health and safety. The PNW LNG terminal will only accelerate fracking in the interior.


Flawed CEAA doesn’t address the salmon

In March 2016, the Canadian Environmental Assessment Agency (CEAA) released its report on the PNW LNG terminal’s predicted environmental consequences. While the report noted the LNG export facility would likely harm harbour porpoises and contribute to greenhouse gas emissions, scientists have claimed that the report falls short in its assessment. An open letter signed by more than 130 scientists point out that the report disregards science not funded by the project proponent and vastly underestimates the importance of the Flora Bank to salmon, herring, steelhead, and waterfowl populations.

Flora Bank is one of the largest eel grass habitats in the world and home to the second largest salmon producing watershed in Canada. It's located next to Lelu Island, where Petronas wants to build its export terminal.

A 1973 report by the Department of the Environment noted the Flora Bank as a vital ecosystem for the rearing of millions of juvenile salmon undergoing smoltification, and as unacceptable location for a terminal. The light sensitive eelgrass provides the smolts with food and shelter from predators while they transition from fresh-to-salt water during their cycle. The salmon that rely on the Flora Bank originate from habitats throughout the Skeena, Nass, and Stikine River Watersheds, making the protection of Flora Bank vital, not only to the salmon, but also to the many Indigenous Nations throughout northwestern B.C. who rely on the salmon for sustenance.

The importance of the Flora Bank has not changed since 1973, so why has the government’s assessment bodies? Today the salmon are more endangered than ever due to salmon farms, leached mining waste, hydro projects, and destructive industrial practices; vital salmon habitats such as the Flora Bank require more protection today, not less.


Indigenous sovereignty matters

To get fracked gas from northeastern B.C. to coastal regions, pipelines need to be built; however, many Indigenous Nations like the Unist’ot’en have said “No” to pipeline projects that threaten their territories and way of life.

The Luutkudziiwus of the Gitxsan Nation followed their example in 2014 by permanently closing their Madii Lii territory to all pipeline development, effectively cutting off access to 32 km of TransCanada’s proposed Prince Rupert Gas Transmission (PRGT) pipeline route. This is the pipeline that would connect Petronas’ fracked gas in the Montney Shale-gas basin to their proposed export facility at Lelu Island.

The proposed pipeline would cross over 1000 waterways, require the dredging of 1,500,000 square metres of materials from the Skeena River estuary, and pose a threat of explosion. It would also require the clear cutting of 900 km of forest.

The Gitxsan have never ceded their land and maintain sovereignty. They were never consulted by TransCanada and their refusal of the pipeline has been ignored by industry and government. They recognize that the salmon they rely on in their territory also rely on the Flora Bank and they stand in solidarity with the Lelu Island land defenders who are protecting it.

Since August 25th, 2015 members of the Tsimshian Nation, who have title and jurisdiction over the land, have been camping on Lax U’u’la (Lelu Island) to prevent Petronas from drilling. Their move came after the Tsimshian community of Lax Kw’alaams turned down Petronas' $1.25 billion offer to set up the LNG terminal on their territory.

On September 16th, 2015 the Nine Allied Tribes of the Lax Kw’alaams announced Title litigation over Lax U’u’la, and in January, 2016 a coalition over more than 300 hereditary and elected Indigenous leaders, scientists, politicians, fishermen, and concerned people signed onto a declaration to permanently protect Lax U’u’la and nearby Flora Bank from industrial development.

Meanwhile, the campers on Lax U’u’la have been forced to defend their land and sovereignty from Petronas, which has attempted to conduct unauthorized work through their subcontractors since August. The defenders have informed contractors that they are trespassing, and have faced intimidation from company workers, the Prince Rupert Port Authority, the RCMP, and private security. On October 28, 2015, contractor boats rammed a land defenders’ skiff, almost throwing them into the ocean. Despite the danger, they have remained on Lax U’u’la and continue to assert their sovereignty over their land.

In March 2016 the federal government was scheduled to take the CEAA’s report into account and decide whether or not to allow the PNW LNG terminal; however, due to the mass outcry by scientists and First Nations over the flaws in the report, the federal government decided to postpone its decision by three months. These extra three months can be used to mobilize grassroots resistance to this project, but they can also be used by Petronas to cover its legal bases. It's up to us to decide whether we take a stand against this project or allow it to destroy the north.


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Ashley Zarbatany (Ashley Zarbatany)

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1915 words


LNG is the combination of

LNG is the combination of hydrocarbon products that’s being offered up by politicians and the energy industry as the magic bullet for both the climate and Canada’s energy economy.