Northern resource development brings life-changing decisions, opportunities

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Seaspan CEO Jonathan Whitworth gazes out across Douglas Channel towards a marine jetty reaching out from the Kitimat shoreline and listens to the hum of industrial activity floating over the calm water

 

Right now, the jetty is a staging ground where Rio Tinto Alcan is storing acres of parts for the $4.7 billion reconstruction of its aluminum smelter here. On the jetty, GPS-equipped workers sort through row after row of parts, locating them by bar codes beamed to their devices by satellite. It’s the only way to keep track of the thousands of pieces being assembled. A cruise ship serving as overflow accommodation for workers is moored at the dock.

There is room to accommodate at least another two vessels and that is what has captured Whitworth’s attention. If British Columbia’s LNG ambitions are realized, that’s where massive 260-metre-long tankers will be moored and loaded with liquefied natural gas for Asia’s hungry energy markets.

There are 18 proposals for LNG projects in B.C. but all it takes is for one or two of them to make final investment decisions and this largely unused port will come alive.

“We all keep thinking it’s going to happen soon, you can feel it,” Whitworth says.

He is at Kitimat as part of a tour organized by the Business Council of B.C. to see first-hand some of the economic activity that has already pumped over $6 billion into the Northwest.

Vancouver-based Seaspan is poised to become one small part of that surge in economic growth that is transforming this region.

The Northwest Coast, he says, is a critical part of Seaspan’s business strategy.

“Our core business is tugs and barges in the Lower Mainland. We are well positioned to replicate that in the North.”

Seaspan already has one towboat in the region as part of a joint-venture with the Haisla First Nation. It is being used to train potential crew members and, until there is a firm LNG proposal, to tow logs south to Vancouver Island. It is Seaspan’s “stake in the ground” in the LNG story, says Whitworth.

Whitworth likes what he sees of glacier-carved Douglas Channel. The 90-kilometre-long channel is deep, over a kilometre wide and mostly straight, making it an ice-free marine channel deep into the the province. Up until the closures over the last decade of Methanex’s Kitimat plant and the Eurocan pulp mill, 200 ships a year plied the channel. Over a 60-year period, 80,000 freighter have travelled the channel without incident. Now it is down to only 50 a year that service the aluminum smelter. But that number could increase to 500 ships or more a year if just one or two of the LNG proposals go ahead. They will all require tugs and towboats to ease them into their berths.

“That could add between three and 12 boats and that’s a sizeable investment and sizeable growth for us – especially for our partners in the Haisla First Nation, it’s all good stuff,” says Whitworth. “And it’s not three-year construction jobs.  It would be 20 to 30 years of assisting the ships here in the facilities. With the mariners and the folks to help in the operations, we are looking at from 60 to 200 jobs.”

It’s not just the North that is benefitting from these developments. One project alone – Rio Tinto’s Kitimat Modernization Project – accounts for $256 million in contracts for Vancouver companies. Excluding company costs, $2.76 billion in contracts have been let so far, with $1.5 billion of that amount in Canada.

It’s those kinds of spin-offs that the Business Council of B.C. sees as a key to spreading the economic benefits of development in the North to the rest of the province. Council CEO Greg D’Avignon said the council is aware of the disconnect many British Columbians feel between their own personal prosperity and the economic well-being of the province, which stems largely from resource industries.

“We need to increase the understanding of our economy and how it functions – and some of the trade-offs we make,” he says. “This trip is an exercise to build a common fact base; to try to enable people to see what is happening on the ground, to understand what drives our economy and what brings wealth to this province.”

The numbers are mind-boggling. Projects worth $6 billion are already under construction. Preliminary construction (with no final investment decision on some of them) has begun on another $6.5 billion. Another $95 billion, some of which could be realized, such as the $14 billion Shell Canada-led LNG Canada project, are proposed.

Rio Tinto Alcan has almost  completed its $4.7 billion rebuild, housing workers in an trailer city accommodating 1,500 people at a time. Another 550 are on the cruise ship. The project is employing 3,300 people in total, who are brought in for two-week-long shifts and then flown out for one week off. Rio Tinto Alcan hired first in the Kitimat-Terrace Corridor, then reached into the rest of Northern B.C. for workers, then the province as a whole, and finally conducted a Canada-wide search. Only 35 people, mostly from the U.S. Pacific Northwest, were brought in as temporary foreign workers.

Adjacent to Rio Tinto Alcan, LNG Canada has purchased the former Methanex industrial site. LNG Canada is the most visible liquefied natural gas project at Kitimat. It has land, an office and berthing facilities at the jetty. No final investment decision has been made, but hopes are riding on the Shell Canada project. It’s partners, Mitsubishi, Korea Gas and China National Petroleum Corp. have the customer base needed, a positive sign that the project is a go.  But major players may invest up to a billion dollars in such projects, and then walk, treating it much like an ante in a high-stakes poker game, moving on to another project they are eyeing in another country that shows more promise.

At the Haisla First Nation, chief councillor Ellis Ross warns that LNG offers a province-wide boon but he is concerned that investors could move on.

“There will never be another opportunity like this again, I doubt in my lifetime. I am not talking just about the Haisla, I am talking about the region. I am talking about the province.

“This is going to be life-changing for B.C. We see it regionally and in our municipality.”

He says the 1,700-member band is committed to being part of the economic boom. The Haisla are experiencing the benefits first-hand, he says.

“Band members as young as 21 and 22 years old are buying their own houses with mortgages from RBC,” he says. “They are spending their vacations in Vegas or Vancouver.

Other impacts being felt include an increased demand for skilled workers. At Terrace, wages for mechanics at the local Ford dealership climbed 12 per cent to keep staff from moving down the highway to jobs at Kitimat.

“We are starting to understand the impacts that economic development can have on a region or on a province,” said Ross.

The Rio Tinto rebuild alone has brought wealth to the Haisla community. In Kitimat, there are signs of the Haisla business presence everywhere. They are partners in the security firm at the Rio Tinto site. An office construction project in the city bears a sign reading “Property of Haisla Enterprises.” The work camp is a joint venture between Atco and the Haisla.

Ross warned that without resource investment there is little new money coming into the B.C. economy, money needed to provide social services and infrastructure. But he also stressed that resource development companies need to be honest in their approach, not only to First Nations but with the broader public, if they want support for their projects.

“Social licence is going beyond First Nations now to average citizens who may not have rights and title protected by the constitution but they do have a voice that the provincial government will listen to. Something that we are starting to realize is that we are all in this together.”

Gordon Hamilton is an award-winning writer and freelance journalist specializing in the resources sector. Much of his career was spent at The Vancouver Sun, where, from 1993 to 2013, he was the forestry reporter, writing about the politics, environmental clashes and social issues surrounding resource use. He tells his stories through the people whose lives are touched by our resource economy.


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