The Fort Nelson First Nation has won a potentially precedent-setting decision from the B.C. Environmental Appeal Board that cancels the water licence of a natural gas fracking operation in northeast B.C.

The appeal board — in a decision that took 20 months to deliver — concluded the science behind the licence was fundamentally flawed and the province did not consult the First Nation in good faith.

Both the province and the company involved, Nexen, had argued using the water would have no significant adverse environmental effects and there was adequate consultation.

Calgary-based Nexen, owned by Chinese state-controlled CNOOC Ltd., also made a plea that cancelling the licence would jeopardize hundreds of millions of dollars in investments.

But in a Sept. 3 decision, outlined in a 120-page report, a three-member appeal board panel cancelled the licence that allowed Nexen to extract water from a small lake about 90 kilometres northeast of Fort Nelson. The panel allowed Nexen to use the water it already has in storage.

“I think it’s going to set a precedent that B.C. now needs to pay attention and needs to start looking at critical environmental values throughout all of our territories — not just my territory or the other neighbouring First Nations territories, but all of British Columbia,” Fort Nelson First Nation chief Liz Logan said in an interview Monday.

“They need to have the proper science, they need to have facts they rely on. They need to have experts they rely on. They just can’t arbitrarily make a decision because of industry’s request.”

Nexen — which recently had 95 of its pipelines ordered shut down by an Alberta regulator after it had an oil and water pipeline failure there — could not be reached for comment Monday. Officials with the B.C. Ministry of Forests, Lands and Natural Resources, the agency that issued the water licence, said they would not be able to respond to questions until Tuesday.

Nexen had been issued temporary licences by the B.C. Oil and Gas Commission to take water from the a year from the small North Tsea Lake shallow, 13-hectare lake from 2009 through 2011. It was issued a long-term licence by the Natural Resources Ministry in 2012, which was to end in 2017.

While Nexen was approved for 2.5 billion litres of water a year, enough to fill about 1,000 Olympic-sized swimming pools, the company estimated they needed only 1.2 billion litres a year for their fracking operations, and, in fact, used even less than that.

In making its decision, the appeal board said that internal ministry correspondence showed the province intended to issue the water licence regardless of promised meetings with the Fort Nelson First Nation, and had no intention to substantially address concerns that might have been raised by the First Nation.

“The panel finds that this conduct was inconsistent with the honour of the Crown and the overall objective of reconciliation,” said its decision.

The panel also found that the province’s conclusion that the water withdrawals would have no significant impacts on the environment, including fish, riparian wildlife, and their habitat, was based on incorrect, inadequate, and mistaken information and modelling results.

The limited data available after water was extracted still did not support a conclusion the environment would not be harmed, said the appeal board.

“Rather, the evidence before the panel establishes that excessive water withdrawals may cause adverse effects on the habitat of aquatic and riparian species, including species that the First Nation depend on for the exercise of their treaty rights,” said the panel.

Logan, the chief of the Fort Nelson First Nation, said they are not against economic development but stressed the environment, their culture and traditional way of life must also be protected.

She noted the First Nations had approved 150 referrals for various gas developments last year in their territory.

In a decision last year, a B.C. Supreme Court judge had rejected a lawsuit from a pair of environmental groups which argued the B.C. government was skirting its own laws by allowing energy companies to use temporary licences, often for years, to extract large quantities of water for fracking, instead of making them apply for long-term licences.

ghoekstra@vancouversun.com