The business of heat: British Columbia resource sector struggles to beat the heat

As British Columbia summers bring longer and more frequent stretches of extreme weather, the province’s businesses grapple with the challenge of rising costs, threats to natural resources and changes in consumer spending patterns.

Earlier this month, the owners of the Mount Milligan copper-gold mine northwest of Prince George warned that they might have to cut back production at the mine if they could not get provincial approval for additional water.

A heat wave gripping the Northern Hemisphere has reduced surface water levels in the area where the mine operates, forcing the company that owns the mine, Centerra Gold Inc. (TSX:CG), to apply to the province for additional water allocations.

It is just one example of how industries in B.C. could be affected by extreme weather events – floods, fires and drought – should annual summer heat waves become persistent over the long term. Water levels in the Stikine region have been below normal ever since its Red Chris copper mine went into operation in 2015.

B.C. has been experiencing hotter-than-average summers since 2014. The entire west coast of B.C., from the U.S. border to the Alaskan border, is under a Level 3 drought rating, and as of August 14, 566 wildfires were burning in B.C., prompting the provincial government to declare a state of emergency.

B.C. experienced a bad drought in 2015, and last year was the worst year on record for forest fires and flooding, according to the Union of BC Municipalities.

Floods and fires displaced 65,000 residents and cost the government $637 million. That’s just the cost of fighting fires and flood prevention and mitigation; it doesn’t include other economic impacts.

Bethany Coulthard, a hydroclimatologist at the University of Arizona, said that based on historical patterns, governments and industry in B.C. should be thinking about adapting to extreme weather like drought.

“We know that very severe droughts can happen,” said Coulthard, whose research while doing her PhD at the University of Victoria included studying tree rings on old-growth trees in B.C.

Dating back about 380 years, she found B.C. experienced 16 single-year droughts, some of them much worse than in recent recorded history. The construction of dams in B.C. has helped mitigate the effects of periodic droughts in B.C., she said. Mount Milligan isn’t the only mine in B.C. where a lack of water is becoming a concern…water levels in the Stikine region have been below normal ever since its Red Chris copper mine went into operation in 2015.

Based on historical patterns, B.C. could see much more severe droughts, Coulthard said.

“I think British Columbia, like most of western North America, will be looking at snowpack declines that will translate into water scarcity in the summertime. And if we’re underestimating how bad natural droughts can be in our current water management schemes, when you add the additional pressures of climate change … we can reasonably anticipate more severe drought in the future.”

B.C.’s primary industries – pulp mills, agriculture, mining and natural gas – use large amounts of water and could be affected by restrictions on water use during droughts.

The oil and gas sector uses water for hydraulic fracturing and in natural gas processing. Roughly 36% of the water used in fracking is sourced from private landowners from large dugouts, according to the BC Oil and Gas Commission. A small amount of water (about 1.7%) comes from deep saline aquifers.

There are technology solutions for water use, as Shell Canada has demonstrated. Shell invested in a waste-water recycling project that uses treated municipal waste water from Dawson Creek to supply its gas processing plants and fracking operations.

Today, 98% of the water used in its processing plants and 100% of the water used in its fracking operations is recycled waste water.

But for the most part, the oil and gas sector uses mostly surface water. Close to half of the surface water used is from lakes and streams, which requires a provincial water licence. Those users can be cut off when snowpacks and stream flows get too low.

B.C.’s new Water Sustainability Act was built with drought in mind, said Valerie Cameron, water stewardship manager for the Ministry of Forests, Lands, Natural Resource Operations and Rural Development.

“We built it to have enough flexibility to deal with changing water environments and water availability,” she said. “We don’t want to regulate water, but we will if we have to.

“Water users should develop backup water supplies. Don’t put all your eggs in one basket. Just like communities will develop their own backup water supplies for their residential populations, businesses can do that as well.”

For some industries, such as pulp mills, there may be no alternative but to shut down temporarily when water levels become too low.

In 2015, fears arose that the Crofton pulp mill would have to shut down when levels in the Cowichan River got dangerously low. It managed to avoid that by reducing its water use (using more sea water for cooling, for example).

As for mining, Mount Milligan isn’t the only mine in B.C. where a lack of water is becoming a concern.

Brian Kynoch, CEO for Imperial Metals (TSX:III), said snowpacks are sufficient in regions where its Huckleberry and Mount Polley mines operate, but water levels in the Stikine region have been below normal ever since its Red Chris copper mine went into operation in 2015.

“We started the mine in 2015; we haven’t had a normal snowpack since,” he said.

Mines use large amounts of water in the grinding process and for storing mine waste in large tailings ponds. The snowpack and runoff for the Stikine was 57% below the normal average in 2016, and 64% in 2017.

“Red Chris, we’re tight on water,” Kynoch said. “At Red Chris, we made it through last winter, I would say ‘just.’ That’s the one where we’re a little worried because we’re not long on water there.”

Teck Resources (TSX:TECK.B) says it has not faced any water shortages to date in B.C. The company recycles water it uses at its mines and says it has reduced water use by 11% since 2013 through recycling and reuse.

The burning question of forest management

Water scarcity isn’t the only concern for primary industries in B.C. Forest fires also pose a significant threat to homeowners, business and, of course, the forestry sector.

Last year’s fires destroyed 1.2 million hectares of timber, taking about one year’s worth of annual allowable cut. Even when fires aren’t actually burning, the mere threat of fire, due to hot dry weather, can shut down logging operations for weeks at a time.

While increasing the capacity to fight forest fires once they start may seem like the most obvious solution, that may, in fact, be aggravating the problem.

“We’ve been so successful at putting fires out that we have a huge amount of mature forests, and mature forests is the forest that’s going to have the most amount of fuel,” said David Andison, adjunct professor at the University of British Columbia’s department of forest resources management. “They’re going to be the most difficult to put out.”

B.C.’s mature forests, including provincial parks, are loaded with “fuel” just waiting for a spark, and half of the sparks come from lightning. That fuel includes deadwood and other woody debris and trees that are dead or dying from disease.

Experts say land-use planning and harvesting plans need to change to allow for more prescriptive burning and harvesting to create firebreaks in areas that are known to be vulnerable to large-scale forest fires.

“Something that we’re realizing is that historic practices really focused on fire suppression, which has been quite successful in reducing fires,” said Kate Lindsay, vice-president of sustainability for the Forest Products Association of Canada.

“But now what we’re realizing is that fire is a natural disturbance factor. A lot of ecosystems rely on that fire, and we just don’t have the resources to keep up that level of fire suppression.”

Of 1.2 million hectares of forest that burned last year, 80% were mature forests, Andison said. Coastal old-growth forests are less susceptible to large-scale fires, he added. Old-growth trees are more resistant to fire, and coastal B.C. is not as dry as the Interior.

Andison said harvesting plans need to change so that forests can be managed, not just for economic or conservation purposes but for fire prevention. That would include removing forest debris and having more prescriptive burns and harvesting strategies designed to remove mature stands that are most vulnerable to larger-scale fires.

“The one thing we have the most control over is the fuel arrangement on the landscape, so breaking up that fuel is one of our best weapons, not necessarily for preventing fires, but preventing the majority of them from becoming large fires that are hard to control,” Andison said. “We need to be able to get in front of them.”

Science is also providing some longer-term solutions that may help make B.C. forests more fire and pest resistant in the form of selective breeding of drought- and pest-resistant trees and “assisted migration.”

In assisted migration, trees that have naturally evolved to be more pest and drought resistant, and that are in the process of slowly moving north, are given a nudge through replanting.

“We will take the seed stock of those trees and help move them a little further northward, where we suspect the climate will be advancing,” Lindsay said. “It’s been started across the country. I’d say B.C. is the most progressive because of the mountain pine beetle outbreak.”

(By Neil Bennett)