There is a certain irony in the fact that, for all the work Enbridge has done to advance its Northern Gateway Pipeline—and all the heat it’s taken for so doing—it isn’t the project’s biggest beneficiary. It’s not even close to the biggest, actually. That would be the oil producers in Alberta who want to fill it, and who would, according to a Public Interest Benefit Evaluation done by Wright Mansell Research on behalf of Northern Gateway in 2012, stand to take in an additional $114.8 billion over the life of the project as a result of the “lift” it would give to their realized oil prices.
Enbridge isn’t even second—that would belong to the federal government and its provincial counterparts throughout the country, whose treasuries would swell by $98 billion. And while it will do just fine, thank you very much, if Northern Gateway gets built, the companies that would comprise Gateway’s supply chain will do even better. “For every kilometre of pipeline, there’s about $4 million to $10 million spent,” says Jason Zandberg, an analyst with Vancouver’s PI Financial. “That’s spent on prep work, construction, the steel and all the ancillary services around it.” That said, Gateway isn’t everyone’s golden goose, and there are plenty of industries that could be negatively affected by its construction. So which ones are pulling the hardest for it to take root, and which ones would rather see it die on the vine? Here’s how they stack up.
Steel Fabricators and Manufacturers
Enbridge has committed to making the pipe from steel 20 per cent thicker than required, resulting in the need for 500,000 tonnes of steel, valued at about $700 million
At almost a metre in diameter, a pipeline that would travel approximately 1,177 kilometres would use a lot of steel. But Northern Gateway’s benefits to Canada’s steel industry go well beyond that, according to Canadian Steel Producers Association president Ron Watkins. “In essence, it enables further development of oil and gas resources, and when you then begin to open up further development you also get into other types and forms of steel demand.” That means everything from the steel that goes into the smaller pipelines that link SAGD projects to nearby holding tanks and outtake facilities to the steel that goes into building those tanks and facilities themselves. The value chain stretches all the way back to Eastern Canada, too, where iron ore is mined in Quebec and Labrador before being forged into primary steel forms in Ontario. “There’s a range of benefits floating backwards geographically,” Watkins says.
It wasn’t that long ago that B.C.’s forestry industry looked to be in its death throes. With the U.S. homebuilding sector in shambles and softwood lumber exports still blocked at the border, any meaningful recovery in timber prices seemed like a dream. Well, that dream has come true, and faster than just about anyone expected—so fast, in fact, that the sector is now facing a major labour shortage. According to a 2013 report prepared for the BC Coastal Forest Industry Labour Market Partnership, “Demand-supply gaps are anticipated in priority occupations beginning in 2013 and increasing progressively each year through 2022.” That’s largely due to demographic realities, including the retirement of a large cohort of baby boomer-generation workers. The effects of that are stark: according to the report, “Six of the seven occupations projected to experience the most severe skills gaps over the next 10 years are forestry-specific occupations.” If Gateway gets the go-ahead and starts to compete with forest companies for an increasingly thin pool of young labour, those gaps will only grow wider. And if another multibillion-dollar infrastructure project, be it Site C or LNG, also goes ahead in the same period, there might be no economically feasible way to close them.
Northern Gateway isn’t the only multibillion-dollar infrastructure project that’s slated to be built over the next decade in northern B.C. There’s also BC Hydro’s proposed Site C Dam, which has an estimated price tag of $8 billion, and the buildout of the region’s LNG assets, which will involve billions more in spending. Add it all up, according to PI Financial’s Jason Zandberg, and it could spell the mother of all labour crunches. And while that’s bad news for the proponents of the various projects in the region, it’s great for businesses on the other end of that equation. That’s because increasing wages will almost certainly translate into increased sales at restaurants, on truck accessories and a range of other indulgences— and that’s in addition to the $800 million that will already be spent on transportation, equipment, food and hospitality in local communities along the proposed route during the three-year construction window. “Labour will win out with higher wages, and so will where they spend their money—all the goods and services that are purchased around the area,” Zandberg says. “We’ll see real estate prices going up in these northern communities, and there will definitely be winners as more income flows into the labour pool.”
B.C.’s coastal waters generate hundreds of millions of dollars in economic activity every year in the form of recreational activities like sport fishing and a variety of commercial fishing operations. Commercial fishing alone employs approximately 16,000 people, and it, along with the fish processing and sport fishing industries, generate nearly $1.7 billion annually. And while the construction of Northern Gateway wouldn’t necessarily impact that activity, it would put those industries at greater risk than they face today. A 2012 report by UBC fisheries economists Ngaio Hotte and Rashid Sumaila—sponsored by the World Wildlife Foundation—found that the costs of a major oil spill would be considerable. “We compared the economic benefits of the project to potential losses of spills of varying scales and found that a large-scale spill could cost local fishermen, the Port of Prince Rupert, BC Ferries and marine tourism operators roughly $300 million, 4,000 full-time jobs and $200 million in contribution to GDP over 50 years,” Hotte said at the time of the report’s release.
It’s right there on the province’s licence plates: Beautiful British Columbia. That natural beauty serves as the foundation for a tourism industry that generated $13.5 billion in revenue in 2012, and a lot of it is generated on the coast. “The product that we sell in British Columbia is nature,” says Evan Loveless, the executive director of the Wilderness Tourism Association of British Columbia. “We have many different sectors within our nature-based tourism sector, whether it’s skiing in the mountains on kayaking in the ocean. But the reason people come to do that in British Columbia is because of the natural setting we have.” And while a major spill would have obvious consequences for tour operators who operate on or near the north coast, Loveless says it would also have serious second-order impacts. “Typically, people are going to come to British Columbia for three weeks to a month, and maybe only one week of their trip will be spent partaking in that specific adventure … [but] if they’re not coming for that trip, they’re not coming to British Columbia. They’re going to go somewhere else.”
Diversified Service Providers
It’s no great secret that companies in the business of building and deploying pipelines stand to directly benefit from the construction of a project as massive as Northern Gateway. But the ones that are in the business of doing the less glamorous work that precedes the actual laying of pipe might stand to reap even larger rewards. That’s because there’s just so much of it, from clearing the brush and preparing the site to building the access roads and the facilities along the way. Indeed, the very nature of B.C.’s geography makes that kind of work more important—and more voluminous—than normal. “Any time that a pipeline crosses a body of water, whether it be a stream or a lake, they have to have 12-month road access into these points with valve shutoff,” Zandberg says. “And when you cross into B.C., there are a lot of points where we’ll have to have these additional roads built.”