Now that the election is behind us and the government is focused on developing LNG plants and other infrastructure projects in the province’s northwest, the opportunity for businesses in the Lower Mainland is unprecedented.
The Kitimat Chamber of Commerce has put together a northwest B.C. major projects list that has some 30 projects amounting to $64 billion in investment at various stages of planning. These include projects already underway, such as Rio Tinto’s Alcan modernization project and BC Hydro’s northwest transmission line, as well as projects under preliminary construction, in engineering or in permitting, including six potential LNG terminals, various pipelines, mines and other infrastructure projects.
Even if only a fraction of these projects proceed, the requirements could overwhelm the communities of Kitimat, Terrace and Prince Rupert. To put this in context, the Rio Tinto project has already created a mini-boom in Kitimat, and its budget is $3.8 billion. The LNG plants are estimated to cost between $5 billion and $15 billion each, and it’s not unreasonable to expect one or two LNG investment decisions will be made in the next 12 months.
The provincial government has committed to having the first LNG plant up and running by 2015 and a total of three LNG facilities operating by 2020.
On my recent trip to these communities, the excitement from these local businesses was palpable. But the question that needs to be asked is how much economic benefit will actually trickle down to local communities and the rest of B.C.? The industrial bases in these towns are too small to handle the volume. There are a few medium-sized contractors with capacity to grow, but most of the work will be done elsewhere, or expertise and capacity will be brought in.
The opportunity is ripe for Lower Mainland businesses to get a piece of the action. All sorts of products and services will be needed: construction trades, metal fabrication, camp services, IT, engineering, finance, professional services, you name it. Greater cross-provincial collaboration will also be needed, and, given its experience in oil and gas production, Alberta has a lot to offer.
Businesses need to get ready now to capitalize on the opportunity in the next few years because the scale of work will need companies that have large skills capacities, meeting all the prerequisites required of working with multinationals.
In the Peace River region, most of the gas production supply chain is provided by northern Alberta because that’s where the expertise and the capital are coming from. There is relatively little direct economic activity between the Lower Mainland and the Peace River region. There is a real chance this sort of thing could happen again in the northwest.
For businesses with relevant expertise, it’s time to understand each player’s needs and build on existing relationships. This might include forming alliances with strategic partners, local businesses or First Nations that your company has worked with in the past.
Small businesses will also need to develop the capacity to work with the large multinationals that will own these projects. This includes building best-in-class processes and health and safety programs, gaining certifications or updating skills and technology so that your company can ramp up in time.
It’s an exciting time, but only businesses that are well positioned and prepared will be able to seize the opportunity. •
