"It also shows a shift in our portfolio — Klappan being a part of it — but shifting to northeastern B.C."

In exchange for giving up its gas tenures, the government has reached a second deal with Shell where the energy company is to receive $20 million in royalty credits that it intends to use to develop a water recycling plant in its Gundy gas tenure near Fort St. John.

Energy, Mines and Natural Gas Minister Rich Coleman said both the Tahltan Central Council and Shell had worked to reach the best solution.

Shell could have pushed to maintain its tenure, he said, but recognized its focus was the province's northeast.

"Shell said 'Let's talk' and the First Nations were happy to have us find a solution and not have drilling permits go ahead in that area," he said. "Together, we have put agreements in place that respect the interests of all three major parties."

The issue in the Klappan involved environmental impacts of the extraction of coalbed methane. Coalbed methane extraction does not necessarily involve fracking. However, it involves the removal of large volumes of briny and potentially toxic water from underground coal deposits before the gas can flow, and opponents — including municipalities in the region — were concerned that the discarded waste water would eventually contaminate salmon-bearing streams and drinking water supplies.

The geographic remoteness of the region and the absence of developed infrastructure made Shell's decision to leave easier. Further, unlike Shell's northeastern B.C. tenures, the Klappan coalbed methane is what is known as dry gas — it contains no liquids that have value in making plastics.

Shell has invested about $30 million in the Klappan, having developed three wells and a drilling platform for a fourth well. The company intends to remove the four structures and restore the sites.

At ForestEthics Advocacy, one of the environmental groups that spearheaded the international campaign over the Sacred Headwaters, campaigner Karen Tam Woo said Tuesday was a day to celebrate.

"Days like today are few and far between," she said. "It's a big deal when small communities can stand up to one of the biggest corporations in the world and win.

"For the province, this announcement is quite significant coming out of the Clark government, which has been quite focused on developing natural gas."

McPhee described Tuesday's announcement as only the start of what the Tahltan hope will be a broader ban on mining the coal deposits of the Klappan. She said the Tahltan are already engaged with the province over the future of coal mining. Fortune Minerals, an Ontario mining company, and Korean steelmaker POSCO hold 16,000 hectares of coal exploration licences though a joint venture company, Arctos Anthracite (Fortune owns 80 per cent, POSCO 20 per cent).

Fortune president Robin Goad said in a Thursday news release that the project is still on.

"Fortune will continue working toward development of the Arctos project and will continue consultation with local communities and aboriginal groups to address concerns related to our project," Goad said.

Coleman said he is not prepared to prejudge the Fortune Minerals project.

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Read more: http://www.vancouversun.com/business/2035/Klappan+region+permanently+limits+exploration+announces/7715067/story.html#ixzz2FY6sOaZW