Friday , February 26 2021

Fort McMurray fights camps in the last headache for the power industry

Fort McMurray, the remote Canadian city largely built by the oil sands industry, is trying to limit their ability to fly to out-of-town workers.

The city in the middle of the world's third largest oil reserve is drafting a statute to limit the construction of temporary housing for workers known as men's camps, as it seeks to pressure producers to hire locally or workers to settle there . The aim is to increase population, local businesses and housing prices in a place that bore the terrible blow of 2016 from a devastating fire and falling oil prices.

"We want more people living in this region and calling it home," said Don Scott, mayor of Wood Buffalo Regional Council, which encompasses the city in a telephone interview on Tuesday. "It will give a lot more people in this region a lot more opportunities."

City councilmen voted in favor of a motion to halt the encampments of men within a 75-kilometer radius of the city. Fort McMurray's fight against the men's camps is just the latest headache for producers who have had to deal with oil pipeline opposition and a production cut imposed by Alberta to try to boost local oil prices.

The Alberta government is right to intervene through the contingency order: Peter Tertzakian

Peter Tertzakian, executive director of the ARC Energy Research Institute, says the risks of not intervening in excess oil would be worse than intervention risks.

Preventing producers from establishing new fields would only further discourage investments at a time when capital spending is expected to fall for the fifth consecutive year, said Karim Zariffa, executive director of the Oil Sands Community Alliance, a local trade organization representing the industry.

"Any kind of moratorium imposed on industry is basically a moratorium on development, exacerbating investors' lack of confidence in the oil sands sector," he said, adding that the oil sands companies are trying to attract people to live locally.

"This is only a draft and may never be approved, but there is a risk that this will happen (although deadlines and wording are uncertain) and, if so, can affect 61 fields and 27,256 workers within the limit," Kirk Wilson , analyst Beacon Securities Ltd., said in a note Wednesday.

In recent years, most oil sands projects have been canceled or suspended, while Royal Dutch Shell Plc and ConocoPhillips have sold their operations to local producers such as Canadian Natural Resources Ltd. and Cenovus Energy Inc. Few new oil sands projects were announced since 2014 with the Aspen project of 75,000 barrels per day from Imperial Oil Ltd. being a notable exception last year.

Located 740 kilometers north of Calgary, the average Fort McMurray temperature this month is -17.4 degrees Celsius (-0.7 Fahrenheit), according to Environment Canada data. The history of the city has been linked to the oil industry since the 1960s when Suncor Energy Inc. began mining sticky bitumen from the local soil. Fort McMurray was then just a small, remote outpost along the Athabasca River, connected to southern Alberta by a single dirt road. Today, it houses hotels, chic restaurants and a huge sports center.

When oil prices were trading north of $ 100 a barrel before the crash that began in 2014, the men's camps served as a relief valve. They housed employees who otherwise could overload a city that could not build houses, roads, and infrastructure quickly enough to keep pace with growth.

But the area has registered a population decline of 11% since 2015, to 111,687 last year, according to census results. About a third of this was the so-called shadow population consisting mainly of the workers staying in the camps. The dark population fell by 15% over the period of time.

"Small businesses have struggled," said Mayor Scott. Many workers do not even use the local airport, instead they fly through chartered planes to private runways of companies. Local homes have lost about 25 percent of their value since the crisis of 2014.

"We do not just need the oil sands to be strong, but we need this community to be strong," said the mayor. "It's going to be a balance."

– With the help of Brian K. Sullivan and Michael Bellusci

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