KITIMAT — In Kitimat, the streets are busy — the town full of activity, heady with anticipation.
Also a little apprehension.
At the entrance of town, across the highway from the chamber of commerce office, a new subdivision is under construction.
On a bright, sunny day in early October, the stacks of pale green plastic pipes stand out against the recently cleared dark earth. A stretch of paved road, curbs and light standards are already up. The houses will come soon.
A few hundred metres down the highway, the Hillcrest apartments are being renovated. Down the hill, land clearing is underway for construction of a Microtel Inn, slated to open in August 2015.
All of it attests to a new-found sense of opportunity in Kitimat.
This small community — which has seen its permanent population plummet nearly 30 per cent since the mid-’90s — is in the midst of an economic boom, one fuelled in part by the prospect of two liquefied natural gas export plants that would tap into growing Asian demand for energy.
The two LNG plants — one led by Chevron (Kitimat LNG) and the other by Shell (LNG Canada) — will cost more than $20 billion. The pipelines that would supply the plants will add billions more to the price tag.
And while much of the money will be spent on the plant equipment, pipe and other supplies far from Kitimat, money will also be spent locally on workers, construction materials and fast-food outlets.
Kitimat has already tasted the effects of an industrial construction boom. The workforce for Rio Tinto’s $4.8-billion modernization of its aluminum smelter peaked at 3,200 this summer. (It is slated to be completed next year).
If the two LNG plants were to go ahead — neither company has made a final investment decision — an estimated 10,000 workers would be needed. That would essentially double the population of Kitimat.
Not too long ago, with few economic prospects, the community was being touted as a quiet place for retirees — a place where you could by a nice home for less than $100,000.
Now, home prices have tripled and rents already rival red-hot Vancouver.
If Kitimat is the vanguard of this prospective LNG boom, other communities in northwestern B.C., such as Prince Rupert and tiny Port Edward, may not be far behind.
But how real is this LNG dream?
And if the dream is realized, what then?
Will the hundreds of permanent jobs that remain after the construction dust settles be enough to sustain the expanded housing, the renovated apartments, new hotels and the broadened business and economic expectations?
Even now, there is no guarantee these LNG projects will be built.
Houston, Tex.-based Apache Corp. announced in late summer it plans to sell-off its 50-per-cent stake in the Kitimat LNG project.
And farther west, Malaysian state-controlled Petronas warned recently that unless tax and regulatory issues are resolved by the end of this month, its project could be delayed up to 15 years. The B.C. government unveiled its new 3.5 per cent LNG tax earlier this week, but Petronas said it needed time to digest the details.
Chevron also had a muted response to the new LNG tax, while Shell appeared generally pleased.
The B.C. Liberal government has been saying it’s all about negotiations with the companies — although Premier Christy Clark has toned down her assertion that LNG will be the new underpinning to the province’s economy, bringing 100,000 jobs and helping fund a $100 billion prosperity fund in the next 30 years.
In the meantime, residents in the Northwest wait to see what will happen.
Paul Van der Meer, who works at Linde, which sells industrial gases and supplies for welding, right down to the gloves, has watched business expand in the past two years in Kitimat.
“I’m excited about LNG,” he says.
But Van der Meer immediately injects a note of caution: “Until there’s a final decision, it’s not happening.”
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There is this reality: If the LNG plants go ahead, and once construction is complete, there will still be fewer jobs than during Kitimat’s industrial height.
That’s true for all of northwestern B.C., which has seen its forest products industry collapse in the past two decades.
One sawmill is operating again in nearby Terrace, with owners with connections to China, but two other large mills in the area were dismantled years ago. A pulp mill in Prince Rupert has been closed since 2001 and Kitimat lost its Eurocan pulp and paper mill when West Fraser shuttered the operation in 2010. Several smaller forest operations have also closed.
The remaining vestige of the once-thriving forest sector — seen in the loaded logging trucks on the region’s highways — are raw log exports, which provide fewer jobs than manufacturing.
It helps explain the loss of 3,200 people in Kitimat during the past two decades, and another 5,000 in Prince Rupert.
It has meant tough times for locals who relied directly or indirectly on the forest products industries for work.
The longtime Kitimat firm 101 Industries — a steel fabrication, sheet metal, machining, roofing, heating and plumbing contractor — survived the forest industry contraction.
And now the company is thriving. It has doubled its workforce, and recently employed as many as 120 people.
The company stands to gain even more if the LNG plants go ahead.
General manager Thom Meier would like to see that happen. But he also understands the complexity of the future the region faces — with or without LNG.
He notes that Kitimat lost 1,000 jobs in a heartbeat when the pulp mill closed.
“We have to be cognizant of that — to say how do we maximize, how do we produce legacies moving forward in the future?” says Meier.
“We can’t just be a construction boom and bust economy — we need to ensure there’s some long-term jobs and futures for the people in this area. It’s critically important for the province as well.”
But there’s no simple answer.
Perhaps a research institute tied to the new energy industry, Meier suggests.
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Chevron has construction well underway in Kitimat — 400 workers on the ground already.
Construction of a 14-kilometre paved road south to Bish Cove, on the west side of Douglas Channel, is nearing completion.
At Bish Cove itself, a mountain has been logged and levelled off to accommodate the LNG plant, storage tanks and pier. And a 600-person worker camp has been built on the shuttered site of the pulp mill.
It may not have been intentional, but the decision by Chevron to buy the Eurocan pulp mill site seems more than a little symbolic: one industry is being built on the ashes of another.
Chevron also has regulatory approval and enjoys First Nations support.
But before a final investment decision can be made, it needs to secure customers, acknowledges Rod Maier, Chevron’s external relations and communication manager for Kitimat LNG.
“Why are we making all these significant expenditures before a final investment decision? It’s about reducing project risks and uncertainties. And it’s not uncommon for projects of the size and scale of Kitimat LNG to do that early work,” he says.
Municipal leaders in northwest B.C., including in Kitimat and Port Edward, remain optimistic LNG will be a reality.
When Kitimat mayor Joanne Monaghan, a religious woman, won her first election six years ago, she organized a prayer group to pray for a better future for the community.
She believes those prayers were answered.
“I really do think that LNG will go,” says Monaghan.
She sees a bright future for Kitimat, one where the permanent population in the next three years will jump to 12,500, perhaps even 15,000, from its current 8,300.
In the meantime, Kitimat is dealing with boom-town realities.
It’s sewer system likely needs upgrading to handle the influx of people and an aging bridge into the industrial area needs replacing.
The community also struggles with housing prices and rents that have been driven up by speculation and the influx of workers. It has displaced residents on low and fixed incomes, who are struggling to pay rents in smaller, sometimes rundown places, moving or finding themselves homeless.
“Of course (rents) go up, and they can’t afford it,” observed Monaghan.
The housing issue is a serious one for which there appears to be no immediate solution.
The community is talking to the province about this and other issues, but there are no answers yet, says Monaghan.
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In Cow Bay on the Prince Rupert waterfront, John Turpin takes stock of the LNG opportunities potentially on the way.
His cosy office above a coffee shop is across the street from the harbour, which was once home to a much larger commercial fishing fleet and several canneries. The reduced fishing industry is another piece of the recent economic malaise in northwest B.C.
The proposed $11-billion Pacific Northwest LNG project led by Petronas would be built on Lelu Island immediately adjacent to Port Edward, just a 10-minute drive from Prince Rupert.
The BG Group has also proposed an $11 billion plant in the Ridley Island industrial area in Prince Rupert.
Turpin owns Inlet Express, which operates two water taxis and another vessel that can off-load freight and vehicles directly to land.
He’s already done work for Petronas and Chevron.
Turpin is supportive of LNG, but says he is not about to increase his fleet until a company announces a final investment decision.
The physical work underway here for LNG is much less than that in Kitimat. It consists of some surveying and drilling to test ground and the start of work on a road to access land to develop a construction work camp in Port Edward.
Turpin notes that companies could spend $1 billion to $2 billion on preliminary work and still pull the plug.
“And things can change so quickly in the world market and you don’t have any control over it,” he adds.
If he sounds overly cautious, it may be because promises have evaporated in Prince Rupert in the past.
New owners were supposed to get the pulp mill in Prince Rupert restarted, but it never happened.
There had been hope that a potash terminal will be constructed here, but that hasn’t materialized either.
And while the presence of new LNG offices from Petronas and the BG Group has helped to reduce empty storefronts, there are still signs of decay, not dissimilar to Kitimat, which also has its share of aging buildings.
There are more than a dozen empty storefronts along Third Avenue, Prince Rupert’s historic main street. But businesses are beginning to scope out Prince Rupert in anticipation of LNG going forward, says Prince Rupert Chamber of Commerce executive director Leanne Enns.
And even if some offices that are opening are temporary, it still benefits the community, Enns says.
“And there’s a trickle down to retail — people are fixing homes, going out to restaurants,” she says.
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In Port Edward, on an overcast day in late September, Kristoff Trucking president Murray Kristoff is a little nervous.
Petronas has been making noise, threatening to pull out of the project over the B.C. government’s plans for an LNG tax and what the company is calling a delayed regulatory process.
Port Edward is a tiny community of less than 600 about 15 kilometres south of Prince Rupert. Its population has dropped by about 200 since the mid-’90s.
Visible from the Kristoff Trucking yard is the long-shuttered pulp mill where Kristoff used to work.
“There’s a lot riding on this,” said Kristoff, also a councillor for the District of Port Edward, of the LNG prospects.
In anticipation of a positive decisions on LNG, the District of Port Edward has sold two parcels of land for construction camps that would each accommodate about 4,000 workers. It has put $6 million into city coffers, offsetting $4 million lost in taxes from the closed pulp mill.
The juxtaposition of the shuttered pulp mill — which once employed more than 700 people — within spitting distance of potentially new heavy industrial development from LNG is not lost on Port Edward mayor Dave MacDonald.
It’s particularly important to secure long-term jobs for this community and Prince Rupert, given the construction jobs are only temporary and the loss of long-term forestry and fishing jobs, he says.
There’s also an awareness the jobs in the LNG plants will require a skilled workforce, including engineers and technicians.
“It’s very important to me that locals get the jobs and people come home,” says MacDonald. “I say to young people, please stay in school. Get your education.”
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In Kitamaat Village, 11 km south of Kitimat, Haisla Nation chief councillor Ellis Ross looks over the community below, and beyond to the Douglas Channel.
The Haisla have embraced LNG, and even though there has been no final investment decision by Chevron or Shell, it’s had a profound effect on their community.
Anyone in the community who wants a job has one, says Ross.
Training dollars are flowing from agreements with the companies.
Young people are buying houses, getting their own mortgages. Houses are being built on reserve without the assistance of the band, and planning for an apartment building is underway.
Recently, the community built a new public works building with no assistance from government.
There have been challenges that come with LNG that include rising housing costs, rising rents and no vacancies, increased traffic that results in rush hours and stretched municipal services.
Ross does not dispute that. He has even preached a message of preparation to those who will listen.
But the new economic reality — which will include an income stream from Chevron for the lease of Haisla land at Bish Cove if the project is approved — has been liberating, Ross says.
It’s the first generation in his community he can remember to break away from dependence on the government and the band itself.
“Is LNG a good thing for us? Definitely,” he says.
