PNW Marine Terminal Relocation and Project Update March 2017

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1 PNW Marine Terminal Relocation and Project Update March 2017 Community information sessions took place recently in Lax Kw alaams (Jan 28), Prince Rupert (Jan 29) and Vancouver (Jan 30) on the potential relocation of the PNW Marine Terminal currently proposed adjacent to Flora Bank over to Ridley Island. Members were updated on the following: 1. Prospect of relocation of the PNW marine terminal 2. Environmental monitoring agreement 3. Achievement of the benefits package 4. Next steps and timelines Financial details related to the benefits are not included here as this information is privileged and for community members only, not the general public. If you would like to learn more, please contact the band office. 1. Prospect of the relocation of the marine terminal Last July, the Mayor and Council committed to continue to promote the potential relocation of the PNW Marine Terminal further away from Flora Bank because of the communities environmental concerns. After the Canpotex proposal on Ridley was dropped, the potential to move the PNW Marine Terminal and LNG Storage Tanks to Ridley Island became much more realistic. At the same time the estimated cost to construct the suspension bridge also started to become clear; these costs are likely to be very high. There is now potential to move the marine terminal, reduce the environmental risk and increase the economic viability of the project. Image 1: proposed location of marine terminal, suspension bridge/trestle from Lelu Island to the loading dock v1

2 A move to Ridley Island requires that a number of barriers be overcome, notably the contractual obligations that the Port has to other proponents whose interests on Ridley Island pre- date PNW. Together with Metlakatla, Mayor and Council has taken a lead role in convening and facilitating a PNW Terminal Relocation Steering Committee including the Port of Prince Rupert and the Province of BC with direct engagement with the Canadian and BC Environmental Assessment agencies, PNW and other proponents on Ridley Island. Image 2: Ridley Island Lots The first priority is to remove the legal barriers to relocating the terminal (by March 31, 2017) so that PNW can make a decision to invest in the necessary geotechnical investigations. These investigations would include sample drilling in the vicinity of the Lelu occupation camp for the construction of a single- span pipe bridge from Lelu Island to Ridley. Image 3: Bridge with no infrastructure in the water for illustration purposes only v1

3 Given the potential move away from Flora Bank, which has been the primary concern for many people, the occupiers/protesters are expected to support the work being undertaken to relocate the terminal. Image 4: Drill Rig - for illustration purposes only Once the technical investigations are complete, PNW can develop and submit a revised project description and environmental assessment to CEAA and the BC Environmental Assessment Office for consideration v1

4 The process for amending the environmental assessment approvals is being worked out collaboratively with Coast Tsimshian. Lax Kw alaams will be directly involved in this process from start to finish. The new Environmental Monitoring Agreement with the Federal Government and the Provincial Government provides an important platform for this collaborative review process. 2. Environmental Monitoring Agreement Lax Kw'alaams has a unique opportunity to independently monitor all the environmental conditions related to the construction and operation of the PNW LNG project through an unprecedented Environmental Monitoring Agreement. The Mayor insisted that strong environmental conditions needed to be in place to protect the environment around Lelu Island and Flora Bank. If the project is going to be built, Lax Kw'alaams needs to meaningfully participate in the environmental monitoring. As a result, Lax Kw'alaams negotiators concluded a new type of environmental agreement that contains sufficient mechanisms to satisfy the communities' over- all objectives. Lax Kw alaams, Metlakatla, Canada and the Province have now signed the agreement. The agreement ensures that Lax Kw'alaams has a central and ongoing role in the environmental and compliance monitoring of the conditions imposed on the project by all regulatory authorities. Some examples of the environmental conditions to be imposed on the proposed project include standards and safeguards for archeology, traditional uses, air quality, freshwater and marine fish and fish habitat, marine mammals (such as whales), species at risk, wetlands, migratory birds, pile driving, blasting and construction noise. Monitoring Structure The agreement requires the establishment of an Environmental Management Committee made up of the Mayor of Lax Kw'alaams, the Chief of Metlakatla, and senior representatives from both Canada and the Province. This government- to- government Committee ensures that the all of the environmental compliance monitoring management plans and follow- up program requirements are undertaken in a coordinated and collaborative manner. The Management Committee will be supported by a Technical Committee. It will be made up of knowledgeable staff from Lax K.w'alaams, Metlakatla and key federal and provincial environmental agencies (e.g. Department of Fisheries and Oceans, Environment Assessment departments, Environment Canada, and the Oil and Gas Commission). The Technical Committee is responsible for receiving and reviewing all of the monitoring reports and to take the necessary actions as required. These

5 could be anything from providing notice of non- compliance to the Project Proponent up to initiating a work stoppage As illustrated in the diagram above, three different groups of monitors will undertake the environmental monitoring. The Coast Tsimshian Monitor is selected and established by Lax Kw alaams and Metlakatla. It designs and carries out environmental monitoring programs to meet the needs of the two communities. The Independent Environmental Monitor is selected by mutual agreement of all of the Parties along with PNW LNG. The Independent Environmental Monitor will conduct compliance monitoring throughout the construction and operational phases of the Project. The Regulatory Authorities refer to provincial and federal regulatory agencies which will conduct monitoring based upon each of their specific agency requirements. All three groups of monitors will provide their monitoring reports to the Technical Committee. The Technical committee will review them and determine if any action is warranted, including recommending action by PNW and

6 Regulatory Authorities. Issues can also be raised to the Management Committee for senior level attention if necessary. Implementing the Monitoring Agreement This Agreement is the first of its kind - not just for Lax Kw'alaams, but also for British Columbia and Canada. Lax Kw'alaams will now be in a position to do the following: Set up a Coast Tsimshian environmental monitoring program, in collaboration with Metlakatla; Collaborate with federal and provincial agencies, before any construction starts, on the environmental conditions to be imposed on the project, and on Environmental Management Plans setting construction standards on key issues (such as fish and fish habitat, wetlands, pile driving and noise levels); Participate in the selection of PNW LNG's selection of their Independent Environmental Monitor; Participate in, and evaluate all environmental monitoring activities during the construction period and during facility operations; Work directly with federal and provincial compliance officers in the field; Ensure legal conditions are met and if monitors find any situations where conditions are not being met, that enforcement actions are taken. Going beyond this proposed project, this Agreement will build a foundation for how Lax Kw'alaams can work together with the highest levels of both the federal and provincial governments on environmental requirements for other development projects that may be proposed. The Agreement sets a new path for Lax Kw'alaams environmental stewardship in Lax Kw alaams territory. 3. Achievement of the Benefits Package Lax Kw alaams is proud to announce that not only have the benefits agreements been signed as of January 20, 2017, they are the largest of their kind in the history of British Columbia. Benefits of the LNG project to Lax Kw alaams will be derived from three sources: 1. PNW LNG - the project proponent; 2. PRGT the Prince Rupert Gas Transmission (gas pipeline for PNW LNG); and 3. the Province. The largest benefit is derived from the project proponent, PNW LNG. Lax Kw alaams has already received the initial signing payment and pre- signing benefits. As various stages of project completion are achieved, Lax Kw alaams will continue to receive a series of benefits. These stages are the following:

7 1. Signing Complete 2. Final Investment Decision and Construction Period 3. Production Period - trains 1 & 2 4. Production Period - trains 3 & early Signing 2017 mid/end Investigation of marine terminal relocation Project review and Final Investment Decision (FID)/Commencement of Construction Construction Period 2023 (est) In- Service Date Production Period As part of the PNW package and benefits to individuals, every qualified Lax Kw alaams member who wants a job will get a job during the construction phase. Lax Kw alaams also negotiated skills training for the first 10 years and scholarships for youth for the 40- year duration of the project to gain the skills and training to qualify for jobs at the facility. In addition to employment, there will be contracting opportunities; every task typically contracted out will be offered preferentially to a Coast Tsimshian business. Contracting opportunities include: Development, construction and decommissioning of the construction camp; marine services; catering, security, housekeeping and other services and construction opportunities. Communities will also derive benefits from PRGT throughout the phases of the project, from FID and during the 40- year production period. Lastly, the Province of B.C. will provide benefits over the course of project that include financial payments, including resources for the development of housing units for Elders (18 units in total), cellular service to the village, and road or transportation infrastructure which could include road access to Prince Rupert and/or improvements to the Tuck Inland Ferry. Provincial financial benefits also include pipeline payments associated with construction and operation of PRGT, and coastal fund payments during the construction and LNG operation periods. In addition, benefits from the Province include transfer of ownership of the Ridley Island Quarry Parcel as well as land transfers of 559 acres of additional lands adjacent to the village acres of land in and around Prince Rupert will also be provided to Lax Kw alaams. Perhaps most exciting is the transfer to Lax Kw alaams of 16 acres in Prince Rupert which could eventually become reserve lands that could be used for housing and business and therefore receive all of the benefits of being on reserve.

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9 Lax Kw alaams was successful in negotiating a larger benefits package as Mayor and Council worked to get the best deal for its membership. Total benefits to Lax Kw alaams and individuals take the form of ongoing payments, jobs and contracting opportunities from now until the projected end of the useful life of the project in 2063.