Winnipeg Free Press - PRINT EDITION

Ghost town seeks re-animation

Millionaire owner of abandoned West Coast village thinks B.C.'s LNG ambitions could spark renewed life

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VANCOUVER -- Even by B.C.'s highly-prized wilderness standards, the modern ghost town of Kitsault is about as remote as you can get. Located near the end of Alice Arm in Observatory Inlet, Kitsault is 140 kilometres north of Prince Rupert and a world away from Vancouver's big city lights.

Home to bears, salmon, eagles, lush scenery and a very occasional visitor, Kitsault is also, at least in its proud owner's eye, a place in northwestern B.C. that could supply billions of dollars of liquefied natural gas (LNG) to China and other power-hungry Asian nations seeking overseas energy sources to help drive their rapidly-expanding economies.

Built in 1979 to house miners working in a nearby molybdenum mine, plans for Kitsault included 100 single-family homes and duplexes, seven apartment buildings, a medical clinic, restaurants, a pub, a pool and a library. The freshly-minted town, which could accommodate about 1,000 people, also boasted ample hydro and, importantly for export possibilities, deep water for shipping.

But the resource town was abandoned shortly after the prices for molybdenum, which is used in hardening steel, crashed during the 1982 recession. The entire townsite was eventually purchased by Krishnan Suthanthiran, reportedly for close to $7 million, in 2005.

Born in India, Suthanthiran attended Carleton University and the University of Toronto before founding Best Medical International in Virginia, a company that makes and distributes health care products.

The millionaire recently announced plans to resurrect Kitsault as a site for an LNG terminal to ship to Asia natural gas piped to tidewater from northeastern B.C.

Suthanthiran's plan is the latest proposal that would see northwestern B.C transformed -- with the infusion of tens of billions of infrastructure dollars to pay for pipelines, docking facilities, storage terminals and conversion facilities -- into a global energy powerhouse that would generate revenue, taxes and jobs for a generation or more.

According to the B.C. ministry of energy and mines, there are at least six other plans to build LNG plants near Kitimat and Prince Rupert.

At least $1 billion in royalty revenues could be achieved by 2020 from the first three LNG projects, the government says, adding the GDP benefit from five large LNG plants is expected to be over $1 trillion by 2046.

"This is a unique, historical opportunity for the province and for Canada," a ministry spokesperson said. "What we are seeing here is a new industry for the country that will create jobs, revenues and prosperity for British Columbians and Canadians."

Art Sterritt, the executive director of the Coastal First Nations, said if all the LNG proposals went ahead the costs could total $70 billion to $100 billion and would have a massive impact on native Indians' economy and way of life.

But Sterritt added he believes that LNG plants could be built in a sustainable way, especially if operational methods included the use of hydro and wind power to reduce the amount of toxic CO2 and other noxious gases created during the liquefaction process.

"First Nations in the north think we have a responsibility to do this in the most environmentally-friendly way we can," he said, adding a natural gas leak on the land or in the ocean that quickly evaporates would be much less damaging than a lingering hard-to-clean-up spill of bitumen oil from Alberta's tar sands. "It's not a great thing, but it's not a catastrophe either."

Marjorie Griffin Cohen, a political science professor at Simon Fraser University whose studies include energy and environmental issues, believes that several of the plants will be built but she is concerned about the ensuing fiscal and environmental costs.

"It's a very, very expensive project for B.C.," Cohen said, pointing out that the LNG plants could be supplied by subsidized electricity while regular hydro customers could pay more.

She noted that while the LNG plants and pipelines would have a huge economic impact on northern B.C., they also have the potential of being extremely harmful to the environment.

Some environmentalists and native Indians are critical of the proposed LNG plants and other northern megaprojects the province is promoting, saying they would need so much additional electricity that the controversial $8-billion Site C Dam proposal on the Peace River will have to be given the green light.

Located between Taylor and Hudson's Hope, B.C. Hydro's 1,100-megawatt Site C project would be the third dam and hydroelectric generating station on the Peace River. Currently undergoing a provincial-federal assessment, the project would be 83 kilometres long and flood 5,550 hectares of land.

Suthanthiran, meanwhile, says Kitsault would be the best place for a natural gas pipeline to end as it is the shortest and cheapest route from the northeastern part of the province, much of the infrastructure already exists and there is lots of nearby flat land that could easily be built upon.

"We think Kitsault could be a dedicated terminal for LNG," he said, adding total costs for the project could be $4 billion, significantly less than the other proposals. "We see a lot of benefits."

Suthanthiran added he is now focused on talking with native Indian groups, pipeline and energy companies, potential users, investors, and the provincial and federal governments.


Chris Rose is the Winnipeg Free Press correspondent in British Columbia.

Republished from the Winnipeg Free Press print edition January 19, 2013 J11

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