The Woodfibre LNG project at a former pulp mill site near Squamish has received federal environmental approval, ending a week of optimism for the B.C. natural gas industry.

Federal Environment Minister Catherine McKenna announced Friday that the Woodfibre project has been found unlikely to cause significant adverse environmental effects. The project received provincial approval in October 2015 after a joint review coordinated by B.C.

McKenna and the federal cabinet are deliberating on a much larger proposal for liquefied natural gas exports from Prince Rupert, the Pacific Northwest LNG plant and pipeline led by Malaysian energy giant Petronas.

The Pacific Northwest LNG project got a boost this week when the Lax Kwa'laams Band council to a terminal at Lelu Island, notifying McKenna that it would support the plan with two conditions.

Rallies and truck parades were held in Fort St. John and Fort Nelson this week to urge the federal government to approve LNG projects to provide an export market for B.C. gas.

A glut of natural gas across North America has brought drilling activity in northeastern B.C. gas fields to a near-halt, with a recent sale of drilling rights by the B.C. government attracting no sales for the first time in the industry's 50-year history.

Energy Minister Bill Bennett said northeast coal mines are idle in addition to a slump in gas activity, and people are worried.

"The two communities up there that are probably the worst off are Tumbler Ridge and Fort Nelson," Bennett said. "Folks in the Lower Mainland are typically shielded from the ups and downs of the natural resource industries, but if you live in Fort Nelson or Tumbler Ridge or Cranbrook or Williams Lake, you're not shielded. You feel it."

Premier Christy Clark said the federal government is looking closely at the economic impact of LNG development, with Alberta, Saskatchewan and Newfoundland's oil industries also hurting.

"Over 30 years, 100,000 jobs and a trillion dollars potentially in GDP growth, that's a big number," Clark said.

"If they're thinking about First Nations, they will spend some time thinking about  all of the First Nations members who have signed agreements to support LNG, who will be part of building LNG, the environmental stewards."