Tuesday July 22, 2014

Beefing Up for the Boom

Fort Nelson getting ready for LNG
James Waterman Photo

Northern Rockies Regional Municipality mayor Bill Streeper (left) discusses the oil and gas industry in the Fort Nelson area with Enbridge representatives during the Fort Nelson Energy Expo last September. Streeper is hoping to find a way to upgrade the local infrastructure in anticipation of the liquefied natural gas industry boom.

Bill Streeper is taking the Fort Nelson story to Vancouver this February.

As mayor of the Northern Rockies Regional Municipality, the home of Fort Nelson and the prolific shale gas resources known as the Horn River Basin, the Liard Basin and the Cordova Embayment, he is traveling to the big city at the end of the month to attend the first international conference solely devoted to the business of producing and selling a fuel known as liquefied natural gas (LNG).

"There will be other communities there and there will be the producers there," Streeper said as he began to explain his reasons for attending the event.

It is obvious that Streeper has felt some frustration over the fact that so much of the conversation around the emerging LNG export business in B.C. in the provincial media and provincial government publications has been focusing on the northwest, the area where the natural gas will be liquefied before leaving B.C.

Forgotten in that conversation is the geographical source of the natural gas and the small town at the centre of it all.

"You can do whatever you want on the coast," said Streeper. "You can build all the plants you want. If you don't have the source of gas, the rest of it is not going to work.

"The Northern Rockies is probably the most dominant area for supply of LNG gas."

Streeper backs up his claims that the Horn River Basin, the Liard Basin and the Cordova Embayment together rival any other natural gas resource in the world with numbers straight from reputable sources such as the National Energy Board (NEB).

"And this can be a very big key to what is happening as far as LNG and what is happening for the province of British Columbia," he said.

Fort Nelson is the gateway to that rich resource, a growing hub for the producers and service sector companies that are already extracting natural gas from the Horn River and exploring the Liard and the Cordova, but it hasn't been an easy road for the northern community.

Its difficult story dates back to the early seventies when the incorporation of Fort Nelson by the provincial government left the major industries beyond the municipal boundaries and beyond the right of taxation by Fort Nelson.

Consequently, tax revenues were insufficient for the community.

When Fair Share was introduced to help municipalities in the Peace River Regional District (PRRD) pay for infrastructure improvements, Fort Nelson didn't receive any of that funding despite experiencing similar circumstances where oil and gas industry activity takes place in rural areas beyond taxation by the municipality, but also puts a strain on municipal infrastructure that is felt in the form of dollars and cents.

Streeper discussed the situation at the local airport as an example of why this has been a problem for Fort Nelson.

"The quickest increase in airport traffic of any tier two airport in Canada," he said.

That has been a result of oil and gas industry activity in the region.

"The maintenance and the upgrade on the airport is borne by the citizens of Fort Nelson, not by industry," he continued.

The federal Airport Capital Assistance Program (ACAP) only provides funding based on regular airline traffic.

"They give us money for that runway," said Streeper. "And they give us a grant for where that airplane parks. They don't give us anything for any other traffic."

Streeper explained that that funding would be adequate if the only traffic was the usual small passenger airplanes, but oil and gas industry companies are now using the airport for much larger aircraft that cause a greater amount of wear and tear on the runways.

"Now that that has come about, the airport terminal isn't big enough, the runway isn't big enough, the parking lots aren't big enough," he continued.

"They're using the airport. And it was funded by the regional municipality. So, the first thing we did is we introduced the landing fee for these charters … and that is the only income we have for the increased traffic."

Industry response to that move has been favourable.

"This is something that other towns have done," said Streeper. "And they realized that they increased the traffic and they're going to have to pay something for it. But the fee we get is actually too little, too late right now. If we had have started this four or five years ago, we would have been a lot better."

Fort Nelson has been spending that money on improvements such as runway repairs and adding bathrooms to the airport.

"We're not making nothing off it," Streeper said of the fees. "We're just trying to get the airport up to an acceptable standard."

Fort Nelson attempted to solve the problem by pursuing the creation of a regional municipality, which took place in 2009 with the incorporation of the NRRM, but there was still no resolution to the infrastructure cost issue.

"That forced us to go to the provincial government and say, 'Look. With these three major gas deposits coming on and the [number of] people that are coming in for it, we need help,'" said Streeper.

Street maintenance is a big issue, as is housing, particularly considering the fact that Fort Nelson is unable to expand at the present time.

"All the land that we can expand into is owned by the provincial government," said Streeper. "In order for us to access that land, we have to buy it from the provincial government."

If that were to happen, there would also be the cost of expanding the water and sewer systems, installing new streetlights and paving new streets in order to create a subdivision.

"It is not my [intent] to go to the taxpayer to increase their taxes to pay for subdivisions for new people to move in to," said Streeper. "Once the people move there, they will be paying taxes on the property. But it's a chicken and egg thing.

"We've gone to the provincial government and want them to do some old land development like they used to do. And they said, 'Oh, well, it's too risky.' Well, you want us to do it? It's too risky for us. So, we're in that situation right now trying to get that all done."

NRRM took a hard look at all the areas that need improvement within Fort Nelson, problems that range from inadequate recreation and fire hall facilities to the state of the Alaska Highway where it runs through town, and determined that the community requires millions of dollars worth of upgrades.

"Then we went to the government and said, 'Look. We've got to get this community up to a standard to attract employees.'"

The problem according to Streeper is that the oil companies are encouraging their employees to live in Fort Nelson, but the accommodations simply aren't available.

"There's nowhere for the people to move," he said. "We don't have a complete recreation system here. We don't have facilities that are attracting the new workers."

Streeper feels it is the responsibility of the provincial government to help NRRM address those issues since they receive the revenues from land sales and natural gas royalties and Fort Nelson is so important to the future of the oil and gas industry in the province.

"And the government agrees with us," he said. "They said, 'Yes, something's got to be done up there.'"

NRRM and the Province are now working toward completing a Memorandum of Understanding (MOU) on a community development plan.

"It's just a matter of how do we get the money to do this," said Streeper.

The Province has told NRRM to get creative.

"We've got some creative plans," said Streeper, who is confident that NRRM will be able to work with the provincial government to achieve their goals now.

"Hopefully, we're going to have more final stuff in place by the end of [February]," he added.

"The negotiations are quite open. The ministers are quite receptive to us. … And the way it's progressing, I think we're going to see a very bright future for the Northern Rockies in the years ahead."

When Streeper arrives in Vancouver for the LNG conference, he will be talking about how municipalities, provincial governments and the oil and gas industry can work together to achieve a common goal, which includes building the LNG industry in the province.

"Our goal," said Streeper, "is to build a community no better than any other community in B.C., but par with the communities of B.C., where you can come, you can have a very good job, a community that you can raise a family in.

"To supply a quality of life that people expect in today's age."

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