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Truce Reached for Now on Canadian Blockade of Shell Pipeline

CommoditiesJan 10, 2019 16:59
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© Reuters. Truce Reached for Now on Canadian Blockade of Shell Pipeline

(Bloomberg) -- A truce was reached in a dispute over a natural gas pipeline in western Canada, easing tensions for now as government leaders remain wary of intervening on the side of either the company or indigenous protesters.

Hereditary leaders of the Wet’suwet’en First Nation in British Columbia reached a tentative deal with police late Wednesday to effectively allow work to resume on part of Royal Dutch Shell (LON:RDSa) Plc’s $31 billion gas export project.

Coastal GasLink workers will be able to access a bridge that had been barricaded, so long as a nearby protest camp isn’t dismantled, the Canadian Press reported, citing comments from one of the chiefs. Prime Minister Justin Trudeau also said Wednesday there had been a resolution. “This is how this is supposed to work,” he told a town hall event in the Pacific coast province.

The standoff is emblematic of the challenges such projects face in Canada. Policy makers are grappling with complicated questions about energy, traditional indigenous land and the role of the federal and provincial governments in trying to balance resource development and aboriginal rights.

British Columbia Premier John Horgan had given little sign his government was ready to intervene in a contentious blockade, shying away from condemning the indigenous group that had defied a court order to remove barricades.

“There is no quick fix to resolving issues that go back to 1876 and beyond,” Horgan said Wednesday, referring to the year of Canada’s Indian Act and the thorny legacy created in the province, where most First Nations have never formally ceded jurisdiction of their ancestral lands. “We recognize the right of individuals to protest.”

But he also acknowledged that the project, LNG Canada, had met every requirement to proceed and had the support of all 20 First Nation groups along its corridor, including the Wet’suwet’en on whose lands the blockade is taking place. “We believe that LNG Canada has met the obligations that we asked them to achieve.”

The blockade underscores how hard it’s become for Canada to clear the way for sanctioned energy projects -- even those blessed by all levels of government and elected indigenous leaders. When Shell and its four Asian partners agreed to invest last October after a decade of negotiations, the project was feted as the blueprint for how industry should work with First Nations.

Yet in the months since, a group of holdouts have erected barricades on a public road, preventing TransCanada Corp. from working on the 420-mile (676-kilometer) Coastal GasLink pipeline that will supply the export facility. The protesters ignored a November court order to allow access.

“It’s important to understand that construction time lines require us to gain access to the area and begin activities as soon as we safely can to keep the current construction schedule and time lines in place,” Jacquelynn Benson, a spokeswoman for Coast GasLink, said by email. “Any delays to that would affect our ability to meet those dates.” LNG Canada didn’t immediately respond to a question about delays to the project.

The project -- also backed by Petroliam Nasional Bhd, Mitsubishi Corp., PetroChina Co. and Korea Gas Corp. -- is Canada’s largest infrastructure project ever and the world’s biggest planned liquefied natural gas facility in years.

Indigenous leaders, including a former Wet’suwet’en elected chief, have lamented the blockade for threatening a project that offers rural communities their best shot at economic development. Yet since Monday, when police arrested 14 people to enforce the court order and restore access, protests have flared up across the nation in support of the blockade.

Trudeau, speaking Wednesday in Kamloops, said a number of indigenous leaders support the project. and that a deal had been reached.

“They have actually just removed the barricade, they did that this afternoon,” Trudeau said late Wednesday, without identifying who removed it. “There are lots of questions about what happened there, and people will be looking into those.”

Trans Mountain

In an October interview, Horgan credited LNG Canada’s success to its aboriginal support, contrasting to Trans Mountain, the oil pipeline bought by the federal government from Kinder Morgan Inc (NYSE:KMI). Shell was able to reach agreements with all aboriginal groups, whereas “Trans Mountain was not,” he’d said. “I think that speaks for itself.”

Three months later, it’s not clear that made such a difference.

“British Columbia is unique in Canada -- we have unceded territory and in every corner of the province we have court ruling after court ruling,” Horgan told reporters Wednesday, saying he’d spoken to Trudeau about the impasse. The project, he said, “highlights the challenges of reconciliation.”

(Updates with reported resolution, Trudeau comments throughout.)

Truce Reached for Now on Canadian Blockade of Shell Pipeline

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