BC LNG project divides Indigenous nations, risks financial and environmental harm

National Observer

28-07-2025

A long-delayed and controversial liquefied natural gas (LNG) pipeline and export terminal in northern British Columbia is now officially back on track and promoted as a new opportunity for Indigenous economic development.
However, a report released last week warns that the risks — to land, community and even investors — are far greater than the promised benefits.
The Prince Rupert Gas Transmission (PRGT) pipeline and Ksi Lisims LNG terminal are poised to export up to 12 million tonnes of LNG annually, much of it destined for Asian markets. The pipeline's route cuts through Gitxsan and Tsimshian territories, but many hereditary leaders and community members remain opposed.
Janna Wale, who is a Gitxsan community member and co-author of the new Yellowhead Institute report said the dominant narrative portraying LNG projects as straightforward economic opportunities overlooks significant realities.
'There's been one kind of narrative presented — economic growth is good and LNG equals opportunity. But there are trade-offs and checks and balances. It's important to include those in the conversation,' Wale said.
Financial risks
Financial risk stands out as a core issue for Indigenous communities being drawn into the project as equity investors, joint venture partners or through procurement contracts.
'There's been one kind of narrative presented — economic growth is good and LNG equals opportunity. But there are trade-offs and checks and balances. It's important to include those in the conversation,' Janna Wale said.
Hayden King, executive director of the Yellowhead Institute, said these communities also bear the greatest risks if things go wrong. Few long-term shipper contracts have been signed, forcing the project to depend on the volatile spot LNG market, where global competition is fierce and prices are unpredictable.
The report highlights that Japan and South Korea — key prospective markets for BC LNG exports — are already experiencing surpluses.
'Given the glut in the LNG market, where is this going to be sold, to which market and how is it going to get there? Those answers are not yet clear and so that presents a risk to those in it, and then those that are impacted by it,' King said.
Emily Lowan, who co-authored the financial risk analysis for the report, said 80 per cent of PRGT's funding comes from loans and 20 per cent from direct investment. With this setup, sharing the equity portion equally between two parties (Western LNG and the Nisga'a Nation) means each holds a 10 per cent ownership stake in the whole project.
'Equity owners are paid after lenders, which means they are financially vulnerable if a project defaults or does not result in projected returns,' Lowan said.
While Ottawa's $10 billion Indigenous Loan Guarantee Program is seen as proof that the government wants Indigenous communities to have a real share in these projects will offer some financial cushion, Lowan said the program does not cover lost revenue if profits fall short or shield nations if a commercial partner collapses.
Lowan said at the time the report was written, no loan guarantee programs protected the full corporate debt exposure. The Nisga'a Nation's $3 billion equity stake would absorb nearly 30 per cent of Canada's Indigenous loan guarantee fund.
If costs overrun — as seen in previous megaprojects — lenders may demand more equity or refuse additional financing, potentially triggering defaults, she said.
Environmental and social concerns
The report highlights how the floating LNG terminals and associated infrastructure will threaten marine ecosystems through dredging that destroys coral reefs and oyster beds, underwater noise pollution and shipping operations that produce significant greenhouse gas emissions.
'It really is a watershed of impacts. When you start to impact one part of that system, the rest of the ecosystem will be impacted as well. These cascading effects are especially concerning as climate change stresses these environments,' Wale said.
The pipeline crosses two of British Columbia's largest salmon-producing river systems, requiring clear-cutting through major waterways and drilling beneath critical spawning habitats.
Wale warned the pipeline will bisect important salmon runs, huckleberry patches and moose habitat critical to Indigenous food security and cultural practices.
Despite this, the pipeline's approval relies on a permit granted in 2014. In June, British Columbia's Environmental Assessment Office ruled construction was 'substantially started,' allowing developers to move forward without a new review. This permit bypasses contemporary environmental standards, even as climate impacts worsen — raising concerns among conflicting Indigenous voices.
Socially, resource hub towns such as Terrace are expected to face higher housing and food costs and overwhelmed health services.
'There will be 1,200 people in a man camp just a kilometer away … our health care system here is hanging on by its threads, and we're going to be bringing in over 1,000 workers into a tiny community,' said Gina Mowatt, a Gitxsan member.
The influx of transient workers in 'man-camps' also raises worries about increased risks of sexual violence toward Indigenous women, a pattern linked to such developments.
Beyond these risks, the report details uncertainty linked to BC's shifting LNG policy. The 2024 commitment to 'net-zero ready' LNG projects by 2030 still allows ongoing fossil gas use if electricity isn't yet available, meaning emissions will persist and put additional strain on local environments.
Rifts between Indigenous nations
While the Nisga'a Nation has actively invested in and supported the project, many hereditary leaders and community members of the Gitxsan and Tsimshian nations oppose it, asserting they never gave free, prior and informed consent.
King warned that this dynamic revives a colonial 'divide and develop' tactic that pits Indigenous Nations against one another.
'There are plenty of opportunities for First Nations to negotiate with BC or Ontario or Canada, but fewer opportunities for nations to negotiate and undertake this type of diplomacy amongst themselves and I think that's by design,' he said. 'I don't think Canada wants nations to be working together. I think they want them to be divided.'
He said the governments and corporations cultivate division by labeling communities that support resource development as 'the good Indians' while portraying resisting groups as 'the bad Indians.'
This 'cleavage that's created and cast,' King said, mainly benefits external actors and undermines Indigenous governance, long-standing diplomatic relations and collective power.
He said the approval process itself risks deepening these divisions by advancing consultation and consent with only select Indigenous groups, while excluding others is further fracturing Indigenous unity.
Mowatt frames the conflict as a struggle between Indigenous communities and external actors, rather than a dispute within Indigenous nations.
'[Instead] the war is against PRGT; the war is against these massive international corporations that are coming into our territory, every intention to destroy our lives here,' Mowatt said.
As the project moves forward amid fractured consent and complex risks, the social and environmental stakes continue to weigh on the communities whose lives and lands intersect with the pipeline's path.
'We need the whole picture … it's about the legacy left for future generations, and who actually gets to decide what that legacy will be,' Wale said.