The $40 billion LNG Canada two-train project and the $6.2 billion Coastal Gaslink pipeline to northeast British Columbia both received positive financial investment decisions (FID) Oct. 1, raising hope in Canada’s beleaguered energy sector that better days are ahead.

Just as important as the economic benefits of the project is the way both projects partnered with indigenous communities on the West Coast and along the pipeline route, earning political support that should help avoid the ferocious opposition that has plagued crude oil pipeline projects in both western and eastern Canada.

The market for Canadian LNG is Asia, especially China, where a combination of natural gas and renewable energy is now the preferred option to generate electricity for the country’s rapidly growing economy. The Canadian Association of Petroleum Producers (CAPP) estimates that by 2040 global gas consumption is expected to increase 4% to 199 billion cubic feet per day (Bcf/d). That demand explains why project lead Royal Dutch Shell is partnering with Malaysia’s Petronas, PetroChina Co. Ltd., Korea Gas Corp., and Japan’s Mitsubishi Corp.

“The project’s “competitiveness, low carbon emissions and relatively short shipping distance to China mean LNG Canada can help supply the increasing demand for gas in China,” said PetroChina CFO Wei Gao, in statement.

The decision was welcomed by the Canadian government, the target of industry anger for recent legislation that would remove pipeline environmental assessments from the National Energy Board (LNG Canada was approved in 2014 under existing rules).

The announcement “represents the single largest private sector investment project in Canadian history. It is a vote of confidence in a country that recognizes the need to develop our energy in way that takes the environment into account, and that works in meaningful partnership with Indigenous communities,” Prime Minister Justin Trudeau said in a statement.

“The final investment decision taken by our joint venture participants shows that British Columbia and Canada, working with First Nations and local communities, can deliver competitive energy projects,” said Andy Calitz, CEO of LNG Canada, which will build two processing units or “trains,” with first LNG expected by 2025.

Kitimat, site of the facility, was chosen from 500 potential sites in British Columbia, partly because its location 660 km northwest of Vancouver guarantees low temperatures that reduce liquefaction costs.

The 30 mtpa plant will be sited on the territory of the Haisla Nation, an enthusiastic supporter of the project. Chief Councilor Crystal Smith praised LNG Canada for setting “the bar very high in terms of interaction” with indigenous people.

“Their approach is community-based. They have worked on our needs and the environmental impact with our environmental team. The environment is absolutely important to us, and LNG Canada has set a standard for how to address our concerns, and for how responsible development can be done.”

According to the LNG Canada, the LNG plant and Coastal GasLink pipeline will employ 10,000 workers at peak construction and as many as 900 during first phase operations.

Coastal Gaslink, a subsidiary of pipeline giant TransCanada, plans to award $620 million of contracts to indigenous-owned businesses in northern BC to supply right-of-way clearing, medical, security and camp management needs, and expects another $400 million in additional contract and employment opportunities during pipeline construction. Both companies entered into “benefit agreements” with affected indigenous communities.

George Hemeon, senior manager of indigenous and local contracting and employment for Coastal GasLink, says that it worked with First Nations to design long-term benefit programs that include “direct project involvement through specialized liaison committees and tailored contracting and employment plans that meet the specific needs of indigenous communities.”

The BC government also entered into agreements with indigenous communities that provide financial payments and other benefits, such as a mechanism to resolve disputes.

“That is one reason why the elected councils of all 20 First Nations along the pipeline route have reached agreements with Coastal GasLink. And those agreements also mean training, education, jobs, business opportunities, and careers,” said Karen Ogen-Toews, CEO of First Nations LNG Alliance.

CAPP head Tim McMillan estimates the project will grow Canada’s economy by an average of $7.4 billion annually over the next 30 years. “Today’s announcement by LNG Canada represents an important next step in the development of a new industry in Canada, one that would provide access to growing Asian markets for Canada’s vast natural gas resources,” he said.

The announcement was good news for western Canadian natural gas producers, whose production was forecast to decline as much as 50% in the face of stiff competition for Eastern Canada markets from U.S. companies in the Utica and Marcellus basins. One of those producers, Canadian Natural Resources Limited, thinks the FID by LNG Canada will create a domino effect.

“If you get one plant through,” CNRL’s executive vice chairman, Steve Laut, said last week at the Global Business Forum in Banff, “there will be a second and third plant that will follow much easier, and that makes a difference.”

A West Coast LNG market for methane was cited by the Alberta government’s Energy Diversification Advisory Committee’s report as a key piece to future petrochemicals expansion in that province. Without it, growth would likely be less than half of what is expected. Early this year, Alberta announced two petrochemicals incentive programs totaling $1 billion.

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