Today, the government of British Columbia joined the Tahltan Central Council (TCC) and Shell Canada (Shell) to announce an agreement has been reached to resolve the status of natural-gas tenure in the Klappan area of northwest B.C.

As part of a tripartite agreement, Shell Canada is immediately withdrawing plans to explore for natural gas in the Klappan by relinquishing its tenures. In addition, the Province of British Columbia will not issue future petroleum and natural-gas tenure in the area.

A separate agreement between government and industry will also lead to a new water recycling project - to be built by Shell - through the issuance of $20 million in royalty credits support by the Province of B.C. The terms of this arrangement were agreed upon between government and Shell in recognition of the lost, upfront capital spent by the company, in addition to rent payments already paid to the Crown on the Klappan tenures.

The Klappan is an area that has been identified by the Tahltan Nation as having significant cultural, spiritual, and social values. It is also an area of vital salmon-bearing waterways such as the Stikine, Nass, and Skeena rivers, and as such has importance for all British Columbians who rely on those rivers.

The tripartite agreement represents a step forward in discussions between the Province of British Columbia and the TCC, with support from the Tahltan and Iskut Band councils, about the long-term future of the Klappan area.

Quotes:

Rich Coleman, Minister of Energy, Mines and Natural Gas -

"The government of British Columbia would like to thank the Tahltan Central Council and Shell for their commitment to positive communications during the last few years. Together, we have put agreements in place that respect the interest of all three major parties and have tangible benefits for British Columbians."

Ida Chong, Minister of Aboriginal Relations and Reconciliation -

"Resolution of concerns around the Klappan area is a significant step in this government's relationship both with the Tahltan and with industry. We look forward to continued progress in working with Tahltan through our government-to-government relationship as we work together on land and resource matters across the Tahltan territory, as well as more particularly within the Klappan area."

Annita McPhee, president of the Tahltan Central Council -

"We want to acknowledge Shell for its decision to respect the wishes of the Tahltan Nation by giving up its plans to develop coal-bed methane in the Klappan. The Klappan is one of the most sacred and important areas for our people. It is a place of tremendous cultural, spiritual, historic and social importance. Our people do not want to see it developed, and we look forward to working with B.C. on achieving permanent protection of the Klappan."

Lorraine Mitchelmore, president and country chair, Shell Canada Limited -

"Close relations with Aboriginal communities are important to our many business opportunities in British Columbia, and we are pleased to have found common ground on our petroleum and natural-gas tenure in the Klappan. We now focus on growth opportunities with better commercial and geological prospects in Northeast British Columbia. Good water management is central to sustainable operations, and we thank the government of British Columbia for their contribution to this aspect of our exploration and production activities."

Quick Facts:

• Royalty credits can be applied to an industry's payment to government once the infrastructure they are approved for is operating. They are not an expenditure of provincial funds; they are deductions that are made to future royalties owed to government.

Learn More:

More information about the Ministry of Energy, Mines and Natural Gas can be found at: www.gov.bc.ca/ener/

More information about the Tahltan Central Council can be found at: www.tahltan.org/

More information about Shell Canada can be found at: www.shell.ca

Contacts:

Sandra Steilo
Media Relations
Ministry of Energy, Mines and Natural Gas
250 952-0617

Robert McPhee
Adviser
Tahltan Tribal Council
250 686-1883

Shell Media Relations
Shell Canada Limited
1-877-850-5023
media-desk@shell.com

BACKGROUNDER

Klappan Coalbed Gas Field

In 2004, Shell Canada Limited acquired petroleum and natural gas rights covering more than 4,000 square kilometres in an area of Northwest British Columbia known as the Klappan. The area is within the Tahltan Nation traditional territory.

The area is of significance to the Tahltan/Iskut people for its cultural and wildlife values and contains the headwaters for the Skeena, Nass and Stikine Rivers.

Shell drilled three exploration wells in the area in 2004-2005. Out of respect for concerns raised by the Tahltan Nation, Shell did not pursue further exploration activities in 2005-2006 to allow for further discussions within the Tahltan communities.

In 2008, Shell agreed to an amendment of its petroleum and natural-gas tenure, which suspended further exploration activities in the area for a minimum of two years with a maximum of four years.

Discussions have been taking place over the last few years to bring resolution to this situation. The agreement reached respects the interest of all three parties involved - the Tahltan Nation, Shell and the Province of British Columbia.

Contact:

Sandra Steilo
Media Relations
Ministry of Energy, Mines and Natural Gas
250 952-0617

Robert McPhee
Adviser
Tahltan Tribal Council
250 686-1883

Shell Media Relations
Shell Canada Limited
1-877-850-5023
media-desk@shell.com