What do you call a high-tech resource society driven by green innovation? How about B.C.-ism

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City residents use British Columbia’s resource products such as natural gas on a daily basis, but how often do they stop to think about the significance of these goods in their own personal lives?

post-image.jpgProbably not much. On close examination, everyday resource commodities are more deeply embedded in B.C.'s ongoing prosperity than many people are aware. Decisions affecting resource priorities should be made with care because the alternatives to a healthy and responsible Canadian resource sector are not attractive ones.  

Jobs are a big part of the story. So are innovation and exports. Once these factors are understood, it is easy to see why political leaders at the provincial and federal levels in Canada are so determined to stimulate healthy resource sectors.

Employment

Let’s start the story with paycheques.

The newest data for B.C. shows that a resource job pays $1,500 a week compared to the average job paying $900. 

Such jobs are also the most likely to be full time, with the average worker in oil and gas or mining leading the province at 38.7 hours a week. 

While it is common to hear that occupations in science and technology are outstripping the resource sector, jobs data from BC Statistics show it is actually the other way around. 

In 2003 there were seven scientific-professional-technical jobs for every job in oil and gas and mining. By 2013, there were only five. 

What’s going on? It’s simple: there was 51.3 per cent growth in oil-and-gas and mining employment during that time versus 25.1 per cent growth on the technical side.  

Both stories are actually quite good, but the fact is that no occupation in B.C. grew as quickly as the mining and oil and gas extraction did during that decade. Only construction came close at 39 per cent growth.

Stagnating growth in tourism and retail jobs – up just three per cent and eight per cent respectively in the past decade – magnifies the important contribution of our hyper-productive resource sector. 

Ten years ago there were nine tourism jobs for every oil and gas and mining job, today there are only six. 

Finance, education, health care, and public administration also saw anemic growth compared to job expansion in oil and gas and mining. 

Understanding the value of resource employment requires more work than just adding up the number of positions.

For example, a resource job in B.C.’s Peace region (where the natural gas is found) produces up to six times the impact on the economy of the average worker in the province, looking at it in terms of export value created. 

The export value per labour force participant in Peace in 2013 was $198,500, almost six times the average of $33,700 seen throughout the rest of British Columbia. 

So every time we lose (or gain) one job in the natural gas industry that’s like losing (or adding) six people in, say, a retail business. 

This is what it means to have a trading economy dependent on exports and imports.

If every worker was as productive as the worker in oil and gas, British Columbia would have a GDP far in excess of the world’s richest nation, Luxembourg. 

Green innovation

Today, natural gas supplies 34 per cent of Canada’s primary energy. The National Energy Board (NEB) says that by 2040, as cleaner gas pushes out oil, coal and nuclear, that share will rise to 44 per cent. 

Clearly, we cannot do without natural gas if we expect to create a greener society. We do need more of this commodity and unless we want to purchase it from foreign nations, local people must be in place to safely locate, extract, and process it before delivering it to consumers in a variety of forms.

Today’s high environmental standards have created many jobs in managing the risks and impacts of oil and gas development – in air protection, GHG reduction, and water protection. 

This type of innovation shows up in provincial technology data, proving that workers in the scientific-technical fields are heavily involved in the resource sectors. In 2012, research and development in the mining and oil-and-gas sectors drew more spending in British Columbia than the combined areas of pharmacy, medicine, computer equipment, communications equipment, and the information/culture industries. Hundreds of Canadian patents are filed annually in the areas of natural gas, CO2 and oil. 

Suppose we stopped using natural gas, what are the options? Many people concerned about climate change are asking this question, and the fact is there are plenty of options on the table. The rub is that almost all of the alternatives to natural gas are much more costly (the exception being coal).

Solar power, at a cost of three to nine times natural gas generation according to a study by BC Hydro, has got some potential in this northern latitude. Onshore or offshore wind farms are in our future, and with today’s technology could be set up for a range from one to seven times the cost of conventional power sources. Most experts expect the costs will continue to come down, making renewable sources more attractive in future.

Relying on intermittent sources like wind and solar does require backup for when the sun is not shining and the wind is not blowing. Until battery solutions are available, in the non-natural-gas economy we’d need to acquire reliable backup power from new diesel, coal or nuclear plants. (Never mind how we’d meet our international climate commitments in this scenario…) 

Welcome change is coming to energy overall, with the NEB flagging innovations toward grid-scale electricity storage, renewable electricity generating technologies, carbon capture and storage, and alternative fuel vehicles. Resource skills sets will continue to be fundamental to these developments.

If we pursue policies today that curtail production and export of Canadian natural gas, residents need to be prepared for some big disappointments. The transportation sector, for example, is seeking to create fewer emissions by replacing diesel and other fuels with compressed natural gas or LNG. Not having Canadian natural gas to aid this transition will make us reliant on foreign sources, or require us to use more gas and diesel for longer.

By 2040, 10 per cent of Canadian freight – including trucks, ferries, marine tankers and rail locomotives – will be fuelled by natural gas, according to the National Energy Board’s 2016 projection. Once again, it will take working people to create those energy products, and sure-footed political leadership to preserve attractive investment conditions.

Investment 

Only a handful of countries enjoy Canada’s status as a net exporter of both oil and gas, and those who do not have it envy what is ours. The LNG opportunity is a way to ensure that our natural gas industry continues to attract investment and growth, benefiting Canadians first. To see why this is, it helps to understand that, in British Columbia, natural resource activity is the second only to housing as a source of capital investment. 

In the 20 years to 2014, resource investment was worth $100 billion, translating directly into jobs and business growth. (Housing is reliably about double resources; when it comes to much smaller tourism, the "accommodation and food services" and "arts, entertainment and recreation" sectors together drew 12 cents in capital investment for every $1 invested into resources.)

The gas industry is a large component of resource capital spending. This is due largely because of the cost of drilling a new well, often in the $20-22 million range. It takes 135 workers to perform the onsite part of the work, supported by dozens of specialist occupations off-site. It's not a bare-hands job, so equipment is required that is often sourced from elsewhere in B.C. 

Metro Vancouver companies such as Britco, Langfab, Ideal Welding, Falcon Equipment, Columbia Tank and Aspen Trailer account for hundreds of quality jobs making things for the natural gas economy. 

Over many years, there has been a tight correlation between business license applications and increased resource revenues. If capital is driven away by suppressing investment opportunities, one of the places where we will immediately see a serious hit is in new business start-ups. 

Most nations place energy security high on their priority list. In Canada’s case, we could give up our energy independence and import our gas from the U.S. at prices beyond our control. Americans already are finding themselves with excessive gas that they are selling into Ontario. They’d be more than happy to sell it to B.C. too, if we handed them that opportunity. 

There are some serious downsides to losing control of one’s energy destiny. China and Japan have long experience with this problem, which explains their energy policies that encourage a diversity of suppliers (including Canadian LNG). 

As the world’s largest nations by population, China and India will for the foreseeable future remain net importers of fuels like LNG. While Canada isn’t the total solution for the these countries, its products are associated with stability and quality. 

Technology

In British Columbia today, the resource sector performs the function that a CPU (central processing unit) provides to a computer: Resources drive the economy by providing the inputs necessary for every human activity. 

A CPU may not take up as much space as other components, and it is safely tucked away out of sight, but without it the screen is staying dark. The same is true of natural resources, in which a low-profile appearance belies high impact on the economy.

Here is how the CPU simile applies to one specific example: the B.C. natural gas industry.

Relatively high natural gas prices from 2005 to 2008 drove additional investment in technology development. In this period, competition in the North American market stimulated experimentation and innovation in the field. As the National Energy Board of Canada put it, there was a “dramatic shift in the natural gas production outlook was largely driven by technological advances.”

This trend converged with available gas infrastructure to drive a dramatic shift in the North American natural gas market that ultimately made British Columbia a qualified contender for the international LNG market.

As a result, natural gas jobs today are spread across the most robust part of the economy: the intertwined resources/utilities/construction fields. These occupations together have grown at twice the rate of overall jobs during the past 10 years and are second only to health care and social services.

It’s fashionable to discuss resources as old-fashioned and irrelevant, but anyone holding an iPhone is a participant in the modern resource economy dependent on energy, minerals and fibres.

Screenshot_2016-06-23_11.13.17.pngThe broad economy is becoming more diverse, which is clearly beneficial. What is not often acknowledged is that the resource sector is also extremely diversified. Commodities are prone to great price swings, but there has never been a time when all BC resource groups declined in the same year (2009 was nearly the exception, but gold prices climbed during the world economic crisis). In addition, history also shows that resource prices always come back. 

Within a general trend toward greater economic diversification, the value of British Columbia’s CPU, er, resource exports grew 2.4 times over 20 years. We can see, in the following chart, that resource products have actually outpaced the value growth other things we make and export:Screenshot_2016-06-23_11.17.06.png

Resources and our cities

Do jobs in natural gas matter? They certainly do to those who have them. And they matter if we want a thriving economy with stable supplies of a clean and increasingly popular fuel.  

This province’s economy has accomplished what few others have, with a high-technology energy and resource sector intertwined to provide the lifeblood for dynamic urban regions like Metro Vancouver, Greater Victoria, Kelowna, Kamloops and Prince George. 

Prosperity from the regions is essential to fund big investments in urban liveability such as transit and sewage treatment. We can’t choose between them, we need both.

This is called the “and-more” culture, as distinct from the “and-or” mentality. Resource exports are four-fifths of BC’s goods exports, providing a healthy chunk of the $7,350 a year required to provide health, education and social services to each and every British Columbia resident. There is no need to choose between them when we can have both. Choosing to exit our resource industries because of the belief that the environmental risks are not manageable would definitely create a Brexit-like hangover that could not easily be fully comprehended in advance.

Resources provide Metro Vancouver with more than just the raw materials to build condo towers and new SkyTrain lines. The sector pours cash into the urban South West through royalties, wages, taxes paid, export earnings, and spin-off jobs. 

Years back, Vancouver’s internationally recognized flair for urban planning sparked the term “Vancouverism” to describe a distinct approach to the built and natural environments. 

By the same token, there deserves to be a term to describe the integrated, high-tech resource economy that we have become today. What we have is as unique and special as Vancouverism. So here is a term to try out: B.C.-ism.

B.C.-ism is when you have achieved true environmental and economic balance. British Columbia today is closer to this status than anywhere else in the world, and it has both the resource sector and the environmental movement to credit for this.

Others covet the elements of B.C.-ism and would do things our way if only they could.

The biggest economic engine driving provincial GDP remains the region outside Metro Vancouver. And it is why, like never before, voters need to support B.C.-ism with policies that nurture resource jobs within a dynamic broad economy. 

Stewart Muir is the founding executive director of the Resource Works Society and a co-author of the award-winning The Sea Among Us: The Amazing Strait of Georgia, which in 2015 won the BC Book Prize as the most outstanding work that contributes to an appreciation of British Columbia.

 

A note on sources

The information in this article is drawn from a broad range of sources, including:

National Energy Board annual energy outlook 2016
BC Statistics labour force data
Exports Analysis (2014): Northeast & Peace River Regions, Urban Futures Institute.
Additional information on capital spending is from a to-be-published Resource Works study examining public sector impacts of the resource economy, and is drawn from Ministry of Finance annual reports.

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