Site C filling gaps in subdued resource economy

The Site C dam is helping to pick up the slack in a subdued northeast B.C. economy, as weak resource market conditions will continue to hamper growth this year, says a new economic report released Monday.

Central 1 Credit Union's Regional Economic Outlook expects employment and population growth in the region to remain flat as the oil, gas, forestry, and mining industries remain subdued from 2019. The $10.7-billion Site C buildout is bringing economic benefits to the region, says Central 1’s deputy chief economist Bryan Yu.

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“B.C.’s economic growth will be driven by investment in the burgeoning technology sector in Vancouver and the surrounding Southwest quadrant. It will also benefit from major infrastructure projects, including LNG Canada’s $40 billion natural gas liquefaction plant in Kitimat and the associated Coastal Gaslink Pipeline in the North Coast region and public-sector investments such as the Site C Dam in Fort St. John,” Yu said in a statement.

“Interior B.C. markets will face more challenging economic circumstances due to the combination of forestry sector job losses, challenging coal and energy markets and still subdued investment in mining,” he added.

The B.C. economy is forecast to grow by 2.8% this year.

Read Yu's outlook for northeast B.C. below:

Regional economic conditions in B.C.’s northeast were soft in 2019 as subdued commodity market investment, weakening forestry and fl at employment weighed on labour and housing markets. Weak resource market conditions will continue to hamper growth in 2020 before prospects improve.


Headline employment data pointed to a reversal in employment growth following 2018 gains. Average employment declined 2.5 per cent in 2019 albeit with some upward momentum late in the year. The only positive story was relatively steady full-time employment levels as part-time employment pulled back sharply. Average unemployment rose to 6.3 per cent of the labour force, from 5.7 per cent in 2018. Caution is warranted in areas with relatively smaller populations and geographic reach like the Northeast. Indeed there are some signs that the labour market is stronger than headlines suggest. Labour force participation rates remain firm at 75 per cent, while there has been no discernible increase in the number of employment insurance recipients in the region which is encouraging, although forestry sector influences are still reverberating.

Site C

Economic drivers in the northeast are mixed. Currently, build out of the Site C dam continues to provide economic benefits for the region. According to BC Hydro, there were more than 3,900 construction and non-construction contractors working on the site in November, which was up by a third from same-month 2018. While only 20 per cent are from the Peace region and the remainder being filled by mobile workers from other parts of B.C. Many of these individuals are not captured in the Labour Force Survey estimates but do contribute to the local consumer demand.

Oil and gas

At the same time, key industries remain in subdued. Investment interest remained low in the oil and gas space with land right sales plunging in 2019. Only 20,000 hectares were disposed of by the government, with total tender bonus at a $14.7 million and down 77 per cent from an already weak year of $64.1 million in sales 2018. This was the lowest on record. Drilling rigs in B.C. continued to decline in 2019. There is little in the near-term to drive a sectoral improvement. Natural gas prices remain low, while an increase in B.C. natural gas demand will likely require a sectoral rebound in Alberta oil production and investment which is not forthcoming. Longer-term completion of LNG Canada’s export terminal will boost natural gas drilling in the region and investment, although this will lift the economy in 2021 and after. Work on the Coastal Gaslink Pipeline will modestly support employment.


Like other regions, forestry has been hit by the broad market downturn. While less impacted by the mountain pine beetle epidemic than other regions in B.C., the Northeast has not been immune to the downturn. Louisiana-Pacific OSB mill in Fort St. John shut down its operation in June citing slumping demand and high wood costs. The firm reportedly employed 190 people and had capacity of 800 million square feet. Louisiana Pacifi c’s Dawson Creek plant is in better shape, with the plant receiving $4.5 million in funding in early 2019 to convert to SmartSide Lap Siding production, generating higher value production. Curtailments have also occurred at Canfor’s Chetwynd and Fort St. John operations, alongside similar decisions by other fi rms in the region. Timber harvest activity has declined sharply. Improved market conditions could lift the region given less MPB effects, but recent closures suggest lower manufacturing capacity in the future and fewer available jobs. Affected workers will likely transition into projects like Site C and possibly the buildout of LNG Canada’s liquefaction plant and pipelines, although skills are not entirely transferable.


Adding to the parade of negative news has been a weakening coal market which is curtailing exploration and hampering expansion plans for new mines. Conuma operations are stable but low prices will bite into operations. The U.S.-China Phase 1 trade deal will support global market conditions for steel which will stabilize the coal outlook.

Labour & Population

Not surprisingly, challenging conditions in key economic sectors will hamper labour market performance and be a deterrent in attracting potential newcomers. Average employment is forecast to be unchanged in 2020 following a 2020 contraction before rising thereafter as economic activity improves. The unemployment rate trends near six per cent and dips to near fi ve per cent in in 2021.

Population growth is forecast to remain flat, as net outflows to other parts of the province are offset by positive contribution for births and modest international immigration. Stronger economic prospects, job and education opportunities for younger residents outside the northeast have consistent driven net interprovincial and intraprovincial losses in recent years which will continue. Statistics Canada estimated net losses of more than 1,000 persons annually to other regions of B.C. and Canada. Population in the Northeast is forecast to remain unchanged this year, with mild uptick of 0.2 per cent in 2020 and 2021.


Sluggish sales conditions have generated downward pressure on home values in recent years. The median resale value in the Northeast came in at $301,000 during the first five months was essentially unchanged in 2019 at $268,000. Broadly, the housing market remains weak. Housing sales-to-listings conditions in the northeast, proxied by the Northern Lights real estate board region, and the B.C. Northern board area point to prevalence of a buyers’ market. The median value is forecast to hold near $270,000 through 2021 with upside later in the forecast as higher investment lifts the housing market.

Email Managing Editor Matt Preprost at

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