March 14, 2012

Peace Region Boom

Growth in northern town leaves residents feeling the pinch

by Sheldon Birnie

The Dominion - http://www.dominionpaper.ca

Dawson Creek and the entire Peace Region of Northern Alberta and British Columbia have experienced massive change due to gas finds. Money and development have rushed to the area, and while some tout the economic boom, others worry their town will wind up busted. Photo: Sheldon Birnie

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WINNIPEG—Home to 12,000 permanent residents, Dawson Creek, BC, is surrounded by productive agricultural land and is known as the place where the Alaska Highway begins. Located 600 kilometres northwest of Edmonton, Dawson Creek has seen many cycles of “boom and bust” since the Second World War. During the war, this town was home to a US Army base that built a highway from Dawson Creek to Delta Junction, Alaska—a distance of 2,700 kilometres through the bush—over the span of only eight months.

But this small town, located in the South Peace region of northern BC, has become a stage for controversy, as natural gas development continues to pump millions of dollars into the local economy, despite concerns that some people feel left behind. Currently, the community is experiencing likely the largest “boom” period in the town’s history.

“The development in our area has helped add stability to our economy,” says Mayor Mike Bernier in an email. Bernier has professional history in the natural gas industry, having moved to Dawson Creek in 1993 to work for Pacific Northern Gas. He has been mayor of Dawson Creek since 2008.

“We have seen many companies choose to move to Dawson Creek to capitalize on the opportunities," he says. "Our developers are building as fast as they can to keep up with the demand.”

But in the town, which has been recognized provincially for its progressive municipal planning, opinions remain divided regarding the pace of development, especially when the economic driver is the controversial practice of hydraulic fracturing, also known as “fracking,” to get at shale gas reserves.

The area was put on high alert in 2008 and 2009 when several EnCana gas wells were bombed in protest. While RCMP conducted a massive investigation, including an intensive search of convicted oil and gas “saboteur” Wiebo Ludwig’s nearby property, so far no charges have been laid in the case. A $1 million reward has been offered.

Ludwig has been an outspoken critic of oil and gas development in the area since the 1990s, when his family, and his livestock, began to experience negative health impacts. Ludwig claimed these impacts—which included rashes, headaches, nausea and still-births—were a result of living in close proximity to a natural gas flare. He was convicted in 2000 of five charges related to industrial sabotage of oil and gas wells in the area surrounding Hythe, Alberta, a 30 minute drive from Dawson Creek. Ludwig served two-thirds of his 28-month sentence before being released in 2001. In 2011, Ludwig was diagnosed with cancer of the esophagus.

“For people living in outlying areas with gas batteries in their backyards and stuff, they don’t like it one bit,” says Andrew Triebel, a local tattoo artist. “But at the same time, these [companies] are paying for our public programs. We just have to face the fact that this world is reliant on fossil fuel and this part of the country is rich in it, but there’s got to be a happy medium between corporate profits and ruining our resources forever.”

Marilyn Belak, a former city councilor from 2002 to 2011, and resident of Dawson Creek since the 1970s, says the city’s “greatest challenge is the ‘hurry-hurry’ traditional character of the oil and gas industry.” During Belak’s time on council, Dawson Creek was recognized as a provincial leader in developing and implementing municipal sustainability policy.

“The general industry ethos is to hurry in,” says Belak. “Everything is hurry up and drill and stockpile and pipe. The Oil and Gas Commission services the industry needs above all and the environment and public interests are not addressed in any meaningful and coordinated way.”

Despite opposition from some residents, natural gas development shows no signs of cooling anytime soon. Recently, PetroChina made a billion-dollar investment in Royal Dutch Shell’s massive Groundbirch shale gas project just north of Dawson Creek, making PetroChina a 20 per cent shareholder in the project. And in a recently released report, BC’s Ministry of Energy and Mines detailed how natural gas production—the bulk of which is produced in northeastern BC—could almost triple over the next decade, going from 1.1 trillion cubic feet annually to three trillion cubic feet by 2020.

“With demand growing quickly, prices in Asia are up to four times [what] they are in North America,” wrote Rich Coleman, Minister of Energy and Mines and Minister Responsible for Housing, in the introduction to the report. “BC is ideally positioned to compete for a share of that lucrative market.”

Even though the demand is growing, particularly from Asian countries, full exploitation of the resource is still dependent on variables that are not yet in place. Three major liquid natural gas (LNG) plants in Kitimat, BC, are in the proposal stage. These plants would prepare natural gas from northeastern BC for transport via tanker to markets in Asia. These LNG plants, and any pipeline network needed to transport gas from the Peace Region to the northwest coast, have yet to pass environmental review.

Committing long-term to Asian markets is dangerous for Canada’s long-term energy security, argues veteran geoscientist David Hughes.

“Canada has had no energy strategy since the demise of the National Energy Program (NEP) in the mid-1980s other than ‘let the markets rule,’” Hughes wrote in a recent paper on the subject. “As a result, short-term corporate needs for profit and growth rule the day, often at the expense of the longer-term energy and environmental needs of Canadians.”

Blair Lekstrom, MLA for the South Peace region and former mayor of Dawson Creek from 1996 to 2001, believes that the pace of development in the Peace region is sustainable over the long term. While Lekstrom has had his ups and downs with the provincial Liberal party—at one point he resigned his cabinet position over opposition to the provincial HST—he is currently the minister for transportation and infrastructure.

“The natural gas industry is extremely important to the northeast part of British Columbia, as well as the entire province,” he told The Dominion via email. “It is the single largest contributor to the economy of BC and creates thousands of jobs for families of our region.”

But not every worker coming to the region is necessarily bringing a family in tow, and a migrant workforce has created problems of its own.

The influx of hundreds of workers has created a surge in demand for the hospitality industry in Dawson Creek, and has subsequently driven the cost of housing for permanent residents skyward. For a standard, three-bedroom, 1000-square-foot, 30-year-old house, Blaine Nicholson, a real estate agent in Dawson Creek since 1978, estimates prices to be between $200,000 and $250,000, prices comparable to urban centres like Edmonton.

“That’s kind of your starter home,” Nicholson says. “If you wanted to get into something nicer you could get into a brand new home, in a new subdivision, three-bedroom, 1200 square feet, full basement, unfinished...they’re starting at $360,000.”

Despite the negative effect of increased housing prices, Bernier and others continue to argue that these developments are good for the town.

“There have been five new hotels built, new apartment buildings, and lots of residential development,” says Bernier. “The past three years have been the best in our city’s history for private investment.”

Nicholson confirms Bernier’s position.

“It’s never been this busy before,” he told The Dominion. “Most of the hotels in town are operating at 95 per cent occupancy right now, and the only reason they’re not 100 per cent is because of turn-over. Oil patch guys are getting their ‘living out’ allowances, so they’re living out of hotels, paying between $100 a night and $175 a night, and they’re staying in for weeks or months at a time.”

According to a recent article in the Vancouver Province, the increased demands on the hospitality industry has led to a shortage of kitchen and cleaning staff for some hotels and restaurants. The same article says hotels have applied to employ temporary foreign workers through the federal government. If their applications are approved, it would allow them to access temporary labour at lower wages than they would have to pay for local labour. The minimum wage in BC is $9.50 per hour.

With production from gas wells expected to continue increasing over the next ten years, many long-term residents are beginning to feel as though they are lost within their home community.

“It used to be you could go out and anyone you saw, you either knew them or you knew their face, had seen them somewhere before,” reflects Jason Reinitz, a lifelong area resident. “Now it’s just becoming faceless...People appreciate the money it’s bringing in and all. But, and I’ve heard this from a lot of people, it’s not the same place anymore.”

Sheldon Birnie is a writer, editor and song & dance man living in Winnipeg.

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