When Kathleen Connolly isn’t monitoring economic data, talking with local businesses or obsessively following natural resource industry news, she’s scanning the parking lots of hotels and restaurants in Dawson Creek, B.C.
As executive director of the Dawson Creek and District Chamber of Commerce, it’s Connolly’s job to keep her finger on the pulse of the local economy, and the number of oil and gas industry big rigs parked at local establishments is as good an indicator as any.
Once again, the lots, tables and rooms are full. And, with a March agreement for the first exports of B.C. liquefied natural gas (LNG) from the local Montney basin, they may stay that way.
“Definitely there’s a recovery,” she said. “I don’t think it’s overnight we’re back to 100 per cent. It’s a very slow recovery. But it’s definitely hopping, there’s absolutely no doubt.”
“We’ve got a ton of infrastructure projects going on right now,” she continued. “All of the service industries—the hotels, restaurants, the pubs—are doing really well. Our realtors are saying they’re seeing more interest in the housing market again. They’re selling more than they did last year at this time. So there is a positive rebound.”
After two years, northeastern British Columbia is coming out of an economic slowdown caused by a global supply glut of oil and natural gas, the region’s key commodity.
There’s optimism in the region again. Commodity prices are improving, drillers are lowering their break-even points through improved technology, and investors are starting to take note of the region’s rich supply of natural gas liquids (NGLs) – including light oil, condensate, propane and butane.
“We are liquid rich,” Connolly said.
There is so much value in Montney’s liquids that, for some companies, the natural gas they produce is almost a byproduct.
“The point is that the Montney is being developed irrespective of LNG,” said David Austin, a lawyer specializing in energy with Clark Wilson LLP.
Many in the region believe B.C.’s liquefied natural gas industry will get off the ground, pointing to last year’s positive final investment decision on Woodfibre LNG near Squamish, which will also tap into Northeast gas.
According to B.C.’s most recent Major Projects Inventory, released in Q3 of 2016, investors have proposed $21.6 billion in spending on projects with capital costs over $15 million in Northeastern B.C., accounting for 6 per cent of all major project proposals in the province (totalling $325 billion). After tough economic times, the region is gearing up to once again punch above its weight.
Another positive indicator: land sales for oil and gas drilling are returning. In January, the province’s monthly drilling rights sale netted nearly $40 million. That’s more than the last two years’ sales volume combined, though it remains to be seen whether the trend will persist.
Art Jarvis, executive director of Energy Services BC, said there’s cautious optimism around Fort St. John and the North Peace region.
“The slight uptick started in early December, and the initial fear was that it might be just end-of-year budget spending,” he said. “But it hasn’t slowed down. It’s continued, and this first quarter is doing very well.”
That has spinoff benefits for the local service industry—everything from oilfield contractors to restaurants, bars, landlords and property management companies.
“It’s loosened up the pockets,” said Jarvis.
Coal is back
Other commodities industries are showing signs of life too. Coal is making a comeback. In Tumbler Ridge, the region’s mining centre, two metallurgical coal mines are back up and running after Conuma Coal Resources bought the former Walter Energy properties at bankruptcy auction. Forestry continues to backstop the local economy, especially in Chetwynd, though there’s anxiety over the future of the Canada-U.S. softwood lumber agreement.
While northeast B.C.’s recovery has been largely independent of LNG, the export market the industry would provide could be a major boon for the region.
First LNG exports
Meanwhile, a recent agreement to move natural gas from the Montney fields to an LNG export terminal in Louisiana represents the first exports of LNG from B.C.
Buyer Cheniere Energy Inc. said the company wants to tap into secure supply basins after opening up its landmark LNG export terminal at Sabine Pass in Louisiana a year ago
Still, things aren’t booming in the Northeast just yet. Residential building permits last year were a third of what they were in 2013, when permits topped $60 million. The official unemployment rate remains in the double-digits. But now, at least, there’s hope. As Connolly said, local businesses ended 2016 “in very dire straits.”
“The first half of this year is allowing them to sort of catch up,” she said. “We’re really hoping the last half of the year is as strong as the first half.”
For Northern B.C.,’s biggest city – the air transport and service centre for the region – the strength is already obvious.
Building permits have hit a record pace in Prince George, the population has expanded by more than 5,000 since 2011, the unemployment rate is falling and house prices are rising in a mid-size city ranked among the strongest economically in Canada.
Work on five new industrial ventures added another $3.6 million. Add on permits for $5.2 million worth of institutional work and the total for 2016 was $127.9 million, making it the fourth best year on record.
In addition, the city saw 446 new businesses established.
In January, another $1.8 million in permits were taken, including for new homes, reflective of the city’s 2.8 per cent population growth since 2011
“It reinforces what has been happening in the city for a couple of years,” said Prince George Mayor Lyn Hall. “We’ve seen an increase in private sector investment and now to see an increase in population. That will increase confidence from the private sector in investing in Prince George.”
Hall added that the Conference Board of Canada has predicted Prince George will see the strongest economic growth among mid-sized Canadian cities this year.
- With files from Business in Vancouver