VICTORIA – Opposition politicians were outraged over the B.C. government’s latest effort to secure its first major liquefied natural gas deal, announced last week.

Premier Christy Clark, Natural Gas Development Minister Rich Coleman and Finance Minister Mike de Jong signed agreements with Pacific NorthWest LNG for a long-term gas royalty structure that could run for 30 years.

The government says the deal guarantees minimum royalty revenue for the province, while the investors increase their revenue if the spread between gas prices in North America and Asia increases during the term.

Pacific NorthWest is a partnership of some of the biggest investors and gas customers: Malaysian state giant Petronas, its Canadian subsidiary Progress Energy, Chinese state firm Sinopec, Indian Oil Corp. and Japan Petroleum.

These corporate giants will review a project development agreement, and if they approve, Clark will convene the legislature to approve changes that would compensate them if the new LNG income tax increases.

Environmental changes such as a “discriminatory” carbon tax increase or greenhouse gas regulations on LNG would also trigger compensation. Future changes to general carbon tax or corporate income tax rates would not.

NDP leader John Horgan warned that “too much lolly” is being offered, with no word of job guarantees for B.C. or a deal with First Nations at the proposed site near Prince Rupert.

“My biggest concern is that we’re tying the hands of future governments because a desperate government made commitments that they over-promised on and now they want to get a deal at any cost,” Horgan said.

Green Party MLA Andrew Weaver called it “shocking and irresponsible,” repeating his prediction that the global market is swimming in gas and will never support huge green-field projects across B.C.

For the investors, it’s like a mortgage. There are “subjects” to be removed before the deal closes, and this is a proposed $36 billion mortgage for pipelines, LNG processing and shipping facilities.

This isn’t just a political dispute. For example, Progress has drilled about 500 gas wells in northeastern B.C., and Petronas took it over with this development in mind. Without exports, B.C.’s whole gas industry is looking at a bleak future of low prices and demand.

Petronas delayed its investment decision to this year and cited exactly these concerns, certainty on taxation and royalties beyond the election cycle. With that in hand, their obstacles remain federal environmental approval and a revenue sharing deal with a First Nation to host a terminal.

Pacific Northwest CEO Michael Culbert notes that answers to questions posed by the Lax Kw’alaams First Nation were submitted to federal regulators only days before they started voting on a $1 billion share of LNG proceeds over 40 years.

The vote was a resounding no, despite a redesign that put pipelines on a suspension bridge over the most sensitive salmon habitat. Culbert suggests that given some time to examine environmental mitigation work, that answer may change.

Does aboriginal title offer a veto over projects like this? According to the recent Supreme Court of Canada decision on the Tsilhqot’in case, the short answer is no. Objections could be overridden if governments determine a project is in the interest of the greater public.

Talks have taken place with 19 First Nations affected by pipelines and facilities, and 14 have agreed. While they continue with Lax Kw’alaams and other Tsimshian Nations on the coast, it’s worth recalling that others are not so reluctant.

The Nisga’a Nation has identified four sites as suitable for LNG terminals with a shorter pipeline route to the coast than Prince Rupert.

Tom Fletcher is B.C. legislature reporter and columnist for Black Press newspapers. [email protected]