Huge capital projects are transforming the North Coast economy
For more than a decade, the prospect of developing a liquefied natural gas (LNG) industry tantalized North Coast communities hoping to get a piece of the multibillion-dollar facilities required to export Canadian natural gas to Asia. Now at last it is happening. As of year-end 2019, more than 1,000 employees were at work on the site of LNG Canada’s terminal under construction in Kitimat. With a budget of $40 billion, LNG Canada is the largest capital project ever undertaken in the entire country. Its impact is being felt throughout the North Coast region—which now has the tightest labour market in B.C.—and beyond.
Ground is being levelled, pilings are being driven into the soil, docking areas are being dredged to accommodate the tankers that will take the product to Asian customers, and temporary on-site accommodations are being assembled for 4,500 workers. Employment on the massive project is expected to reach 7,500 in the peak 2022-24 construction period.
Among the key participants is the Haisla Nation, which has signed a 12-year, $500-million contract to provide tugboat services to help tankers navigate the narrow channels to Kitimat. The Haisla have formed a joint venture with Seaspan Marine Transportation, HaiSea Marine, that will build the tugs, train 70 mariners and six onshore staff to provide the service. Members of the neighbouring Gitxaala and Gitga’at nations will also be eligible for employment with HaiSea.
LNG Canada, backed by Royal Dutch Shell and Malaysian national oil company Petronas, may be the first LNG project to get shovels in the ground, but there are still more proposals out there, such as Kitimat LNG and others planned for Prince Rupert. Last November, a Chinese company, Top Speed Energy Corp., announced a plan to build a smaller liquefaction plant in Terrace that would ship LNG to Asian and North American markets in intermodal containers.
“Most of the new jobs in Northwest B.C.’s service sector were generated in accommodation and food services, public administration and other services, reflecting demand for services to support growing interest and activity in mining and LNG in the North Coast,” the Chartered Professional Accountants of B.C. noted in their Regional Check-up 2019.
But even apart from LNG, the region has been enjoying an economic rebirth, buoyed by long-term developments. The Port of Prince Rupert, for example, continues to come into its own as the North American trade gateway closest to Asia. Its container terminal traffic grew 12 percent in 2018, surpassing one million 20-foot equivalent units (TEUs) for the first time. Bulk cargo, meanwhile, rose 10 percent, to 26.7 million tonnes. One contributor to the growth was the opening of AltaGas’s propane export terminal, which began shipping in 2018. The increase in shipping activity seems bound to continue. Early in 2020, Vancouver-based Teck Resources signed a deal with Ridley Terminals to double (with an option to triple) the Prince Rupert terminal’s capacity to export metallurgical coal in the 2021-27 window.
Port expansion has created 1,000 new jobs since 2016, welcome news for a city whose traditional employment base in the forest products and fishing industries has declined over the long term. The Port of Prince Rupert was allocated $153.7 million from the federal government’s National Trade Corridors Fund last fall to improve road and rail access as well as loading and logistics facilities.
Mineral exploration activity is also holding up through the low end of the commodity cycle. Despite tepid global demand for many minerals, the so-called Golden Triangle north of Stewart attracted $165 million in exploration spending in 2018, approximately half the total for the entire province. In August 2019, Australian major Newcrest Mining spent $804 million to acquire a 70 percent stake in Red Chris, an operating gold and copper mine in the area—demonstrating that this area is on the radar of international investors.
The region’s other resource industries, forestry and fishing, aren’t doing as well. But even here, companies are adapting and finding new markets for new products.
Skeena Biofuels in Terrace just completed a $20-million plant that converts shavings and other waste from its sawmill to carbon-neutral fuel pellets for export. Overall, this is the North Coast’s time to shine.