Port of Prince Rupert eyes expansion as B.C. city shakes off hard-luck image

Open this photo in gallery:

The dream of Prince Rupert in northern British Columbia becoming a major gateway for Asian trade is getting revived as the city shakes off its hard-luck image.

While container shipments have slumped this year at the existing Fairview terminal operated by DP World PLC, the Prince Rupert Port Authority is confident that there will be increased demand for cargo handling in the long term.

The port authority is collaborating with Dubai-based DP World to study the feasibility of constructing a second container terminal. Findings from the feasibility study will be available next year.

Shaun Stevenson, the port authority’s chief executive officer, is optimistic about the $2.5-billion terminal project and other growth prospects.

“Given the long lead time of these projects, we need to start now effectively if we’re going to be in a position to bring that capacity on, commensurate with the demand,” Mr. Stevenson said in an interview.

Calgary-based AltaGas Ltd. and Royal Vopak of the Netherlands are planning an $885-million terminal on Ridley Island, near Prince Rupert, that would export liquefied petroleum gas, methanol and other bulk liquids. The new facility would be situated next door to the propane-export terminal that AltaGas and Royal Vopak opened in 2019.

The Metlakatla First Nation and the port authority plan to construct an import logistics park, south of the city.

The port authority is also proposing an export logistics project on Ridley Island as part of efforts to improve the flow of cargo, including “intermodal” freight – goods transported inside standardized metal containers that are readily transferred among trains, trucks and ships.

The port authority’s offices are located in the Cow Bay tourist area, where visitors from cruise ships during ports of call pour into the streets and take in the scenic surroundings of the waterfront and the Coast Mountain range.

Economic stability is a welcome change because Prince Rupert has seen its share of tough times. Memories linger from the impact of the decline of the forestry sector and fishing industry two decades ago on British Columbia’s North Coast.

The community’s hard luck dates back much further. Incorporated as a city in 1910, Prince Rupert drew the attention of railway executive Charles Hays, who unveiled his vision of a thriving port.

Mr. Hays touted Prince Rupert’s location as a competitive advantage that has shorter shipping times to and from Asia when compared with Vancouver or Los Angeles.

In 1912, he went to England to raise money and on the way back to North America, he had high hopes for Prince Rupert as he sailed aboard the Titanic.

Open this photo in gallery:

“He perished on the Titanic and some would argue that his vision went down with it,” said Prince Rupert Mayor Herb Pond. Historical reminders of Mr. Hays abound, from the bronze statue of him outside City Hall to the local high school named after him.

Prince Rupert enjoyed widespread prosperity during the post-Second World War period, bolstered by a pulp mill that opened in 1951. “People made huge money,” Mr. Pond said.

The local economy, however, sagged in the late 1990s through the early 2000s.

In 2011, amid the excitement over liquefied natural gas, Mr. Pond was employed by BG Group PLC’s proposed Prince Rupert LNG project on Ridley Island and worked on the plans until 2016.

In 2014, there were more than 20 proposals in B.C. to ship LNG in tankers to markets overseas. “It was like a gold rush. It got stupid,” said Mr. Pond, who served as Prince Rupert’s mayor from 2002 to 2008, and got elected mayor again last year.

After Shell PLC completed its takeover of BG Group in 2016, it cancelled Prince Rupert LNG one year later. But in 2018, Shell and its partners decided to forge ahead with their LNG Canada joint venture in Kitimat, B.C.

Despite Prince Rupert missing out on LNG exports, Mr. Pond points to signs of the city’s general resilience. One noticeable example is Digby Towers, an 11-storey high-rise that stood empty for almost two decades as Prince Rupert’s population tumbled. Renovations began in 2021 and the residential building’s new owner started listing apartments for rent earlier this year.

Typical prices for single-family detached houses surged to $443,000 last year, up 160 per cent when compared with a decade earlier.

Still, despite well-paid union jobs at DP World and other parts of the port, the economic recovery has been uneven. Near the tourist district, moss grows on the roof of an abandoned commercial building with a For Lease sign on a boarded-up window. But there are signs of economic stability too, as evidenced by the busy Crest Hotel, which the Gitxaala Nation acquired in May.

Prince Rupert’s population peaked at roughly 18,000 in the 1990s, before the pulp mill on Watson Island closed in 2001. The city’s population was estimated last year at more than 13,000 people, slightly higher than in 2008, one year after the Fairview terminal opened.

Instead of glossing over Prince Rupert’s history, civic officials have sought to weave the tragic tale of Mr. Hays into a positive vision. An economic blueprint called “Hays 2.0″ and an offshoot called Redesign Rupert are designed to help fulfill what Mr. Hays envisaged long ago: a world-class port.

The shipping industry deploys large vessels to carry containers, which are reusable steel boxes measured as 20-foot equivalent units or TEUs. Cargo is shipped in such containers, including imported consumer goods from Asia and exports of Canadian raw materials such as grain.

In 2007, the Fairview container terminal opened with an annual capacity of 500,000 TEUs. In 2015, DP World acquired the container facility operated back then by Maher Terminals Inc.

After expansions over the years, Fairview’s annual capacity has reached 1.6 million TEUs, with further improvements planned to boost the total capacity to 1.8 million TEUs by the end of next year.

The second container terminal would add another two million TEUs a year, more than doubling the total capacity to 3.8 million TEUs a year, potentially by 2031.

The port authority, which reports to federal Transport Minister Pablo Rodriguez, serves as the landlord for tenants such as DP World on the Fairview site and Trigon Pacific Terminals Ltd. on Ridley Island.

New York-based Riverstone Holdings LLC and AMCI Group of Connecticut own 90 per cent of coal-exporter Trigon. The Metlakatla First Nation and the Lax Kw’alaams Band own the remaining 10 per cent. Riverstone, AMCI and the two Indigenous groups acquired the coal terminal from the federal government in 2019.

Since then, Trigon has been making plans to diversify, notably by building a second berth in hopes of exporting hydrogen in the form of ammonia as the energy carrier. Trigon’s $163-million project is dubbed “Berth 2 Beyond Carbon,” or B2BC. Ottawa is contributing $75-million toward construction.

The goal is to have the second berth ready to start handling shipments in 2027, with the capability to export wood pellets, agricultural commodities and propane, as well as transporting hydrogen as ammonia. A major buyer of Canadian ammonia would be Japan.

Trigon CEO Rob Booker has worked hard to overcome skepticism about the B2BC project. After showing a Japanese trade delegation the early stages of B2BC’s construction in June, he emerged optimistic about the demand side of ammonia.

“We can scale up very quickly, once the second berth is built,” he said in an interview, as he walked around Trigon’s site.

As part of his efforts to impress the Japanese delegation, he took them to Fukasaku, a 14-seat seafood and sushi restaurant in the Cow Bay tourist area. The discerning guests were pleasantly surprised by the quality of the local food.

For Mr. Booker, who began his career as a geologist and has an MBA from Simon Fraser University, forging relationships is crucial for winning over skeptics, whether it’s about ammonia or sushi.

Market demand for ammonia in Japan is slated to escalate in 2027. “We could be ready for that,” said Mr. Booker, who became Trigon CEO in early 2020, just before COVID-19 pandemic restrictions took hold across Canada.

Historically, the Ridley Island terminal has handled more steelmaking metallurgical coal than thermal coal, which is used by power plants in Asia to produce electricity.

In 2021, the federal government called for the end of exports of thermal coal by 2030 as part of its climate initiatives, so diversifying beyond coal will be important for Trigon. Mr. Booker said the stakes are high in the energy transition for the company’s 135 employees and the ripple effects on Prince Rupert.

“I feel a great deal of responsibility that this work force has work,” he said. “They want their kids and their grandkids to be able to work.”