Coal and LNG uncertainty bog economic growth in Northeast B.C.

B.C.’s northeast can expect sluggish economic growth until 2017, a new report says

The economy of Northeast B.C. is expected to grow modestly by up to two per cent annually until 2017 due to a weak coal market and uncertainty over several liquefied natural gas (LNG) projects, according to a forecast released Wednesday from Central 1 Credit Union, an organization that represents credit unions across B.C. and Ontario.

“Despite positive natural gas and forestry production, growth will be limited by modest gains in the agriculture sector, an exceptionally weak market for coal and reduced commodity exploration,” said Credit 1 economist Bryan Yu in a release. “Some uncertainty over the future of liquefied natural gas projects in other areas of the province may also dampen natural gas drilling and exploration.”

While natural gas extraction in B.C.’s northeast has contributed heavily to the region’s economic output in recent years, questions around several plants planned for the coast—most notably Shell’s LNG Canada proposal, which took a blow when stakeholder Apache bowed out—have delayed potential gains until after 2017. “None of these projects are yet for certain,” said Mitchel Chilcott, CEO of North Peace Savings and Credit Union, in the release.

Coal is the key drag on economic growth in the region, said Yu, as low prices have driven producers to idle mines and curtail development. Lower productions and exploration will hit hard this year, and activity is expected to remain sluggish in the future, Yu added.

On Thursday, Anglo American coal announced that it will idle operations at its Tumbler Ridge mine by the end of the year. Earlier this year, following a drop in the price of metallurgical coal, two other local mines shuttered operations.

The authors of the report expect employment to contract in 2014 by four per cent, but they foresee growth by around two per cent per year thereafter. Meanwhile, home prices will rise seven per cent this year, and an average of three per cent per year until 2017, said Yu.