Fort St. John leads parade of B.C.'s oil and gas boom

By Gordon Jaremko
Times Colonist (Victoria)
11-Oct-2005

FORT ST. JOHN -- Alberta industrial expansion into northeastern British Columbia startles even welcoming local boosters with its power.

"Right now it's almost overwhelming," said travel agent Marva Kosick, president of the Fort St. John Chamber of Commerce. "It's hard to keep up. We're getting new highways, roads, houses, apartments, stores -- anything you can name, it's being built," she said.

About 20 Alberta companies are spending $4.5 billion a year developing natural gas in the region, said Steve Spalding, B.C. manager for the Canadian Association of Petroleum Producers (CAPP). EnCana Corp. alone has long-range commitments averaging $1 billion a year.

In the industry's North America-wide quest for new gas supplies, "B.C. has a key role to play," Spalding told an annual oil and gas conference held by Fort St. John, the industry's regional capital 700 kilometres northwest of Edmonton.

The B.C. gas investments equal about half of annual spending on Alberta's oilsands, based in a community that likes to call itself "the energetic city" with one-third the population of the Fort McMurray region. The B.C. activity is less visible because it spreads conventional drilling, pipelines and plants across vast northern bush country, but signs of strain are everywhere.

All 1,000 motel and hotel rooms in the Fort St. John area routinely fill up every night, thanks to forest products mill construction on top of the gas development. The nearest vacancies are 70 kilometres south in Dawson Creek, and are scarce there. Recreational vehicle camps are full of blue-collar workers' heated trailers and vans. Roads are crowded well before dawn.

And there are still not enough people for all the work available. "There's a shortage of virtually every skill set you can think of," said Fort St. John Mayor Steve Thorlakson. "Unemployment is too low to calculate."

A $12-million oil and gas trades training centre is being built in Fort St. John, with energy companies covering half the cost. By the end of this month, an oil and gas service sector support and recruitment team led by the B.C. Energy Ministry will have held job fairs in 14 communities across the B.C. since the start of the year.

Enthusiasm for energy development has spread into the aboriginal population, which is demanding trade and business training as well as environmental standards and compensation.

"We too are very interested in becoming wealthy," said Liz Logan. As deputy chief of the regional Treaty Eight First Nations coalition, she echoes leaders in the Alberta oilsands region's aboriginal capital of Fort McKay, home base for a growing community-owned business conglomerate.

In the Fort St. John area Doig River First Nation's DRE Oilfield Services is one of the biggest locally owned employers, fielding about 100 staff during winter drilling seasons.

As in the oilsands, where royalty and tax deferrals tailored to industry requests feed the development wave, the B.C. gas boom is fuelled by government co-operation. In B.C. the collaboration started during construction of the $5-billion Alliance Pipeline from the Fort St. John region to Chicago in the late 1990s via a route across Alberta past the northern outskirts of Edmonton.

B.C. policy includes royalty breaks for deep drilling and costly field developments, road and pipeline construction partnerships with energy firms, and a grant scheme called Fair Share that taps provincial royalties to help northern municipalities build services for industrial growth.

The current highly favourable regime came together quickly that in early 2003 after talks between B.C.'s then newly elected Liberal government and CAPP, energy ministry oil and gas policy director Cameron Lewis recalled.

"This is one of the few jurisdictions in North America that is increasing its gas reserves," Lewis said.

The energy ministry will this fall ask the cabinet to make gas development incentives that were initially granted for a three-year trial period into a permanent fixture of B.C. policy, Lewis said.

The package will be sweetened by a fresh royalty plum which makes rates reflect net profits on new fields rather follow traditional practice of taking shares off gross revenues, he predicted.

A 33-year-old environmental moratorium will continue to prevent oil and gas drilling offshore of British Columbia, with the pro-development provincial government blaming Ottawa for indecision on plans to lift the ban.

"The biggest hurdle is to get the federal government moving," B.C. Energy Minister Richard Neufeld said in an interview. "I don't expect much movement until after the next election."

But Neufeld acknowledged popular opposition, encountered by federal and provincial public inquiries, against throwing open drilling targets in some of Canada's most gorgeous and best-preserved coastal areas including the Queen Charlotte Islands region.

"It will come in time," Neufeld said, inspired by visions of wealth in geological surveys projecting eventual discoveries of oceans of energy -- eight billion barrels and 40 trillion cubic feet of natural gas.

"The quickest way for us not to make it happen is to move too fast," he said, adding that his government may have to settle for preliminary seismic exploration as fulfilling its declared objective of a thriving B.C. offshore oil and gas industry by 2010.