Steelhead LNG Inks Deal on Malahat LNG

Steelhead LNG Corp. and the Malahat First Nation have successfully completed a Mutual Benefits Agreement (MBA) and Long-Term Lease supporting the proposed development of Malahat LNG, a liquefied natural gas (LNGLF) (LNG) facility to be situated on the shoreline of Malahat Nation-owned land, formerly known as Bamberton, approximately 8 kilometres south of Mill Bay on Vancouver Island.

The proposed facility, expected to have a capacity of up to 6 million tonnes per annum (mtpa), would include floating liquefaction facilities moored to the shoreline and minor supporting land-based infrastructure. The project’s significant economic impact would include up to 30 years of revenue generation for local, provincial and federal governments during construction, operation and decommissioning, along with the creation of up to 200 high-paying long-term positions once the facility is operational. The project would also create hundreds of additional direct and indirect jobs on Vancouver Island in a wide variety of sectors from design, through construction and operation, as well as training and employment opportunities for Malahat Nation members, members of neighbouring First Nations and other Vancouver Island community members.

“We are honoured to be here today to celebrate our agreements with the Malahat Nation,” said Nigel Kuzemko, CEO, Steelhead LNG. “As a BC-based LNG development company, we are committed to early engagement with First Nations and getting things right. That is why our first step over the past 13 months was to develop a close working relationship with the Malahat Nation based on trust and respect. Our MBA with the Malahat at this early stage of the project is a reflection of our commitment to working with each other and of the relationship we have developed. We look forward to working with the Malahat as we consider the wide range of cultural, environmental, technical, financial and social matters of importance to the Nation, neighbouring First Nations and communities, and BC residents as a whole.”

The industrial-zoned land allocated for the proposed project has hosted a cement manufacturing facility for more than 100 years and is currently being used as a rock quarry, for off-loading industrial equipment and materials and other industrial activities. It is part of a 525-hectare parcel of land that the Malahat recently acquired, tripling the size of their Nation. The transaction is one of the largest Aboriginal land purchases in BC history, and a significant milestone in the Nation’s transition to economic independence.

“As a Nation committed to improving the quality of life for our people, we are excited about this opportunity with Steelhead LNG,” said Acting Chief Tommy Harry of the Malahat Nation. “In 2015, our Nation developed a Comprehensive Development Plan that reflects our people’s needs and their vision of how we want to develop our Nation. We recognized that to achieve that vision, we needed to look beyond our Nation to develop new business relationships and economic opportunities.”

“Since then, we have made significant progress, and this proposed LNG project with Steelhead represents another step forward in that direction. It is also an indication that our Nation is open for business and that we welcome the chance to explore opportunities with those who respect our lands, social and cultural values, and who are prepared to work with us in a truly strategic manner.”

The Malahat Nation is a 319-member Nation located on the western shore of Saanich Inlet, south of Mill Bay. The Nation is part of the Te’mexw Treaty Association, which on April 9, 2015, signed an Agreement-in-Principle with Canada and British Columbia. The Agreement-in-Principle is one of the final steps in the Treaty process, which will lead to self-government once approved by a vote of the Malahat Nation members.

As part of the arrangement between them, Steelhead LNG will provide Malahat Nation with capacity funding to assist the Nation in securing the expertise it needs to ensure the protection of its land and interests. The Nation will also receive direct financial benefits from the project that the Nation intends to use to provide benefits and programs that align with the objectives set out in its Comprehensive Community Plan.

The proposed project will now undergo rigorous regulatory, environmental and technical assessments. Steelhead LNG will also undertake an extensive consultation and engagement process with members of the Malahat Nation, other potentially affected First Nations, local stakeholders and residents.

Steelhead LNG is currently assessing pipeline route options to deliver natural gas to Vancouver Island for both Malahat LNG and the proposed LNG project Steelhead LNG and the Huu-ay-aht First Nations are exploring at Sarita Bay in the Alberni Inlet. The sharing of pipeline infrastructure is a significant enabler for both projects.

The use of floating liquefaction technology provides Steelhead LNG with a low impact facility that builds on the exemplary 50-year safety record of LNG carriers and floating regasification and storage units. While the facility is in the preliminary design phase, the use of pipeline natural gas as an input and being jetty moored in calm waters will allow for a more straightforward design than other floating liquefaction facilities currently under construction globally. The scalability of floating liquefaction technology along with the use of existing infrastructure provides Steelhead with a flexible and independent project that enables investment with a comparatively low LNG sales commitment volume.

On July 8, 2014, Steelhead LNG applied to the National Energy Board for five licenses to export in the aggregate of up to 30 million tonnes of liquefied natural gas (LNG) per year for 25 years. Steelhead has since confirmed to the National Energy Board that one 6 mtpa license will be allocated to Malahat LNG, while the other four 6 mtpa licenses will be allocated to the project at Sarita Bay.