Spurred on by major projects, B.C. upstream oil and natural gas investment in 2021 is forecast to increase to $3.9 billion from $3 billion last year.
2020 was a challenging year. All sectors faced massive layoffs, and businesses of all sizes have been struggling across the country, along with the communities that depend on them.
Though there has been a significant drop in upstream oil and natural gas investment, major infrastructure projects in British Columbia now under construction are helping pave the way for increased investment in 2021. And while it might be easy to get lost in the numbers here, it’s important to point out how this is helping real people, families, and communities across the province at a time where we need it most.
Newly released data shows capital spending in Canada’s oil and natural gas sector as a whole is expected to be around $3.36 billion higher this year, reaching $27.3 billion, compared to an estimated total investment of $24 billion in 2020. Additionally, in B.C., upstream investment for 2021 is forecast to increase by about 29 per cent, up to $3.9 billion from an estimated $3 billion in 2020.
Major market access projects are moving forward and playing a big role in that increased investment in the upstream. LNG Canada is leading the way as one of the largest capital projects in Canadian history, with the Coastal Gaslink (CGL) pipeline being built to supply natural gas from northern B.C. The Trans Mountain Expansion (TMX) has also ramped up construction this year.
These major projects are not included in 2021’s expected additional investment dollars. However, they are helping to drive new investment into production, which will generate both jobs and much-needed government revenues.
Additionally, the B.C. government has taken first steps to provide some of the lowest-emissions energy internationally while remaining competitive. Programs like the benchmark-setting within CleanBC Industry Incentive Program, reduced BC Hydro industrial electricity rates, and the delayed increase of the provincial carbon tax have helped the upstream industry make firm investment plans for 2021.
In November 2020, the newly re-elected NDP government reported the province was leading the country in employment numbers and had added over 30,000 more. Jobs come from economic activity, and in B.C. this has been in large part due to major natural resource development.
So in a COVID battered economy, how did B.C. perform so well and add so many jobs?
After significant preparation work, last year construction began on both the LNG Canada project and CGL. With pipe delivered and getting into the ground, the project’s workforce exceeded 4,000 people in 2020. LNG Canada employs more than 3,200, with the project expected to start production in the middle of the decade.
As of October 2020, TMX had a total of 7,300 people working with approximately 3,645 of which are B.C. residents. Taken as a whole, that’s 10,845 with many more spinoffs to local businesses, contractors and services.
While direct jobs are a huge benefit, the spinoffs are often understated. Many of these secondary benefits are in communities like Clearwater, Terrace, or even Fort St John. These aren’t project construction jobs, but things like hotel workers, locksmiths, and hundreds of other local businesses. The impact is felt by people like Bryan, who runs the local Delta hotel and saw a massive loss of summer tourism last year, but now has steady business from workers on TMX, helping this hotel stay afloat.
Some criticize that once peak construction is over, the jobs go away – but that’s not correct. As just one example of lasting impact: each tanker docking at Westridge terminal of the TMX project brings $366,000 to the region. That represents an annual $127 million in spending on local goods and services, or $2.5 billion over the first 20 years of operations. With TMX capacity expanded, 37 tankers will visit the terminal each month, compared to the current figure of five per month.
Canada is a resource-rich nation, and the resource sector provides well-paying jobs across the country every day. These are the real stakes when people suggest we don’t need resource projects – but never actually explain the impacts on the people who get left behind.
Under a global pandemic causing job losses and economic uncertainty, B.C. can be proud of the major projects driving us forward.
Allie Blades is an Advisor for Citizen Engagement and Outreach in B.C. with the Canadian Association of Petroleum Producers (CAPP). Jack Middleton is an Advisor for Citizen Engagement and Outreach in B.C. with CAPP.