North Coast BC in Transition – 2010 and Beyond

The BC (British Columbia) provincial government separates the province into eight distinct Development Regions.

No other part of BC is set to undergo a deep and profound of an economic transition as that of the North Coast region. 2010 is a year in which the change will accelerate and solidify. The region is set to receive some of the biggest industrial development projects on record for all of BC in this decade.

The region consists of nine major cities and towns. These include the Hazeltons, Kitimat, Masset, Port Clements, Port Edward, Prince Rupert, Sandspit, Stewart, and Terrace.

No conversation about North Coast BC can exclude the past impact of the forest, fishing, and aluminum industries on that region. For the preceding half-century these industries have dominated the landscape and economy of the region.

But it appears that there is a major transition underway and the future of the area has some dramatic economic change in store. The decline of the west coast salmon stocks and its commercial fisheries has all been well documented in the past.

The coastal forest industry has been retrenching for years on the North Coast. A Vancouver Sun newspaper article from January 22, 2008 highlights this:

Although it carries less economic clout than two or three decades ago, forestry remains the backbone of the province’s “export economy,” responsible for 40 per cent of total export earnings and a similar share of manufacturing output. The industry also supports more than 80,000 direct jobs, together with many more indirect ones. Outside of the Lower Mainland and the Victoria region, forestry is the leading source of private sector income for local communities.

The cities of Prince Rupert, Terrace, and Kitimat have grown to be the largest in the region. But, each one has seen their pulp or paper mills, sawmills, and related forest industry businesses close in recent years.

However, the biggest economic contributor to the region has also been the most stable. The 275,000 tpy Rio Tinto Alcan Aluminum Smelter located in Kitimat, BC was built between 1951 to its completion in 1954. An approximate 35,000 construction workers built the Kitimat Aluminum Smelter and its deep-sea wharf, the Kenny Hydroelectric Dam on the Nechako River, the Kemano Power Station, and the town of Kitimat itself. It was one of the 20th centuries most ambitious engineering achievements and it is the reason that to this day, 56 years later, that Kitimat contributes approximately 10% of British Columbia’s total manufacturing GDP.

The region’s economic reliance on the forest and fishing industry is in decline and will not likely return to its previous levels. The shape of things to come will not only affect the Province of British Columbia, it will have an impact on Canada as well.

The future of North Coast BC in 2010 and beyond looks to be tied to new multi billion dollar energy projects, mines, green power projects, aluminum industry expansion, and import/export transportation infrastructure.

There is an excess of $15.0 – $19.0 Billion worth of industrial economic development on the books for the North Coast BC region. The largest are summarized below:

Kitimat:

1. $5.0 Billion – Enbridge “Northern Gateway” Pipeline & Marine Terminal Project:
Two 1,150 km Pipelines, a 190 kbpd condensate import pipeline and 36in 525 kbpd bitumen export pipeline. Project includes a double berth marine terminal, and tank farm in Kitimat, BC. Pending approval of its National Energy Board assessment application and a 2-year construction phase, in-service target date is 2014 – 2015.
2. $3.2 Billion – Rio-Tinto Alcan Aluminum Smelter Expansion Project:
$200M in contracts let in 2007 for design/engineering of high voltage substation (ABB Group), detailed feasibility study, preliminary EPCM. $300 Million contract let in 2008 for completion of EPCM (Bechtel Engineering), new power substation, anode furnace, cast house, construction camp and ancillary services. Project preconstruction activity to commence in summer 2010.
3. $3.5 Billion – Kitimat LNG Liquefaction and Export Terminal:
Project to construct LNG liquefaction and export terminal facilities of 500-700MMcf/day. BC and Canada Environment certification approvals are complete. Final supply/sales contracts underway. Mitsubishi Corporation signed a Heads of Agreement on February 13, 2009 and the Korean Gas Corporation (KOGAS) signed memorandum of understanding to acquire terminal capacity on June 1, 2009. Mitsubishi will purchase 1.5 million mtpa; (30% of KLNG off take) and KOGAS plans to purchase 2 million mtpa (40% of KLNG off take) of KLNG’s 5 mtpa production. FEED study for liquefaction facility underway, construction start anticipated 2010 with operations 2013-2014.
4. $1.2 Billion – Pacific Trail Pipeline Ltd:
Project to construct a new bi-directional 30-36in 470km pipeline delivering natural gas supply to Kitimat LNG for export to Asian gas markets via the interconnect at Summit Lake in north-central BC. Provincial Environmental approval granted June 27th, 2008 and Federal Environmental approval received March 16, 2009. Permitting for pre-construction and construction estimated 2010-2011 with commissioning target aligned to Kitimat LNG development completion in 2013.
5. $150 million – Crab/Europa Hydroelectric Development:
Project by Kitamaat Renewable Energy Corp comprises two hydroelectric green energy run-of-the river facilities in the Gardner Canal area close to Kitamaat/Kitimat. The average generating capacity estimated 51.3MW with rated capacity at 134MW. Power would tie-in to Alcan’s Power Lines at Kildala Arm. Project entered the BC/CEA Environmental Review process in 2007.
6. $TBA – Kitamaat Port Break Bulk Marine Terminal:
Proposed to handle up to 6,902,778 MT of cargo volumes. Government funded study complete; partners include shipping firms, terminal operators and the Haisla First Nation Council of Kitamaat Village.

Prince Rupert:

1. $500 million – Prince Rupert Container Terminal Expansion:
Expected completion of phase two in late 2014 will increase the container port to 2,000,000 TEUs annual container capacity. This will quadruple the current facilities capacity by extending wharf to 800 meters and increasing dock area to 56 hectares. This includes a major increase in the number of post-panamax cranes from 3 to 8 and an increase of on-site storage capacity of 28,560 TEUs at five containers high.
2. $300 million – Canpotex New Potash Export Terminal:
The worlds largest exporter of potash is looking to develop a new terminal to boost Asian shipments of high-demand potash fertilizer from Saskatchewan. Plans call for to nearly double its West Coast shipping capacity to 23 million tones a year. The project, subject to agreements with the port authorities, would add 11 million tones of annual potash shipping capacity to its current 12 million tones by the end of 2012. The new terminal would be located on a 100-acre site on Ridley Island.
3. $1.0 Billion – Katabatic Power Wind Farm Projects:
a) Mount Hays, BC Wind Farm that includes 18 Wind Turbines that can generate 27 megawatts of green power for up to 10,000 homes. Project has been awarded an Electricity Power Agreement (EPA) from BC Hydro to provide the utility with electricity from the Mount Hays Wind Farm for 25 years.
b) Banks Island, BC Wind farm would generate 339 megawatts of clean, renewable wind energy from 103 to 234 (3MW or greater) wind turbine generators. The project would include a substantial bulkhead or port facility, access roads on the island, a substation and approximately 100 km of AC transmission line that will interconnect to an existing British Columbia Transmission Corporation grid.

Terrace & Stewart:

1. $400 million – Northwest Transmission Line Project:
The proposed Northwest Transmission Line (NTL) is a 335 km, 287 kV transmission line from Skeena Substation (near Terrace) north along the Highway 37 route to a new substation to be built near Bob Quinn Lake. This new line has the potential to attract more than $15.0 Billion in mining investment in the region.
2. $5.0 Billion – Galore Creek Mine:
One of the world’s largest and highest-grade undeveloped porphyry related copper, gold and silver ore deposits. The 29,850 hectare (320,800 acre) property is located within the historic Stikine Gold Belt of northwest British Columbia, approximately 70 kilometers (43 miles) west of Highway 37 and 150 kilometers (93 miles) northeast of Stewart, a year-round concentrate shipping port.
As you can see the future economic development potential for the North Coast BC region is nothing short of immense. Each of these projects will have a huge and lasting economic stimulus on the province of BC and some of them will even change the way Canada does its commodity export business.
The impact of these mega-projects will create “Real Estate Boom Times” in North Coast BC during their construction phases and continued long-term economic stability. Overall the future economic transition away from the traditional industries will result in the long-term growth and prosperity of the real estate markets in the region.