Canada aboriginal group weighing equity stake in LNG project

Fri Feb 20, 2015 3:59pm EST
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By Julie Gordon

PORT ALBERNI, British Columbia (Reuters) - A Canadian aboriginal community that has partnered with Steelhead LNG on a proposed major liquefied natural gas export terminal plans to decide within months whether to take an equity stake in the $30 billion project, one of its leaders said.

The Huu-ay-aht are working with the Vancouver-based company on the planning and design of the 24 million tonne per year plant on their land in British Columbia.

"In order to be full partners in a business sense, you have to actually be full partner in the pony-up-the-money sense," councillor John Jack told Reuters at the group's office in Port Alberni on Vancouver Island. "That's a challenge we're looking at solving."

Raising the billions needed to take a meaningful stake in the LNG facility will not be an easy feat for the community, which operates a few small businesses including a forestry company and a restaurant.

But even if the self-governing Huu-ay-aht do not take an equity stake, they own the land around the proposed terminal site and stand to profit from its lease, taxation and other yet-to-be negotiated benefits.

Steelhead is backed by KERN Partners, a closely held Calgary-based private equity firm.

While the project benefits from strong aboriginal support, it does face challenges. Located on the remote western side of Vancouver Island, a long and expensive pipeline is needed to ship gas to the proposed site.

While preliminary environmental and engineering work is underway, a final investment decision is not expected until 2018. That puts the project behind other major developments in the race to build Canada's first LNG plant.   Continued...