Fort Nelson’s case for equity made to Finance Committee

The Northern Rockies Regional Municipal Council and the Fort Nelson Chamber of Commerce travelled to Victoria to present briefs to the Select Standing Committee on finance and government services on Tuesday September 25th, 2012.
The first to speak was Mayor Bill Streeper: “As you probably know, we are the first regional municipality in British Columbia. We are the gas capital of British Columbia. There is no area in British Columbia — as a matter of fact, in Canada — that produces, can produce or has the gas reserves that are even comparable to the Northern Rockies.
“We also have another gas basin that’s coming on line, and that’s the Liard basin. This is just newly discovered, and it does have the potential of being bigger than the Horn River,” Streeper said.
“We have between 3,000 and 4,000 people presently in Fort Nelson residing in camps, and 1,000 of them could be permanent jobs. This is before the LNG was even suggested. It is the wish of the industry, and I believe it is also the wish of the B.C. government, to start turning these jobs — these transient, fly-in and fly-out jobs — into permanent jobs.”
Colin Griffith began the presentation by saying the vast reserves in B.C represent between 60 and 80% of Canada’s natural gas reserves. Three of the major fields are located within the boundaries of the Northern Rockies Regional Municipality.
“The focus in British Columbia has been on LNG as if it was a new and separate industry when, in fact, it’s just the downstream segment of B.C.’s natural gas industry and the development of the reserves from the northeastern part of the province,” Griffith explained.
“What we have been looking at is: what are the implications on infrastructure and on communities as these LNG marketing opportunities take hold?”
The Ministry of Energy last year asked for a business case, looking at the development of 40 per cent of the Horn River.
“Now that’s just a very small segment of the gas reserves in northeastern British Columbia, but if you look at what would happen, it would create and require the expenditure by industry of $36 billion. It would result in the generation of a provincial GDP of $80 billion. Provincial royalties would run over $11 billion. Provincial corporate taxes would run over $35 billion. It would result in the creation, on an annual basis, of 38,000 jobs for the short-term period. That job creation has occurred already, to a large extent.”
In the Northern Rockies right now the Fort Nelson airport is the fastest-growing airport in western Canada in terms of volume.
Griffith said there are no lots available in the community. The infrastructure needs to be upgraded, and what is happening is that the province is losing the benefits of permanent jobs. We’re not talking about the transient jobs. We’re talking about the permanent jobs. We’re talking about Finning building a $10 million shop (in Fort Nelson) and flying mechanics in and out of the community because the infrastructure isn’t there to accommodate the permanent population.
That is what is happening right across the north. It’s not, certainly, just in our community, but it would be right across the northeast and probably and likely will spread into the other parts of the province if there isn’t a move to put in place the infrastructure that’s required to support the development. I think there’s a lag already evident.
We would like to acknowledge that the province has entered into an MOU with the Northern Rockies to develop a community development and infrastructure investment plan, and we’re well underway in preparing that plan in conjunction with various ministries. That work will be done this fall, and is going to outline what the requirements are to support the development of shale gas in the Northern Rockies.
Plan implementation? That is going to require the province, industry and the community start by synchronising their efforts. The Northern Rockies is not interested in some short-term agreement that would say: “Okay, here’s something equivalent to a fair share. Here’s an annual amount of money. You go and deal with the problem.”
We think the problem is much, much bigger and requires a permanent economic structure planning body be put in place to synchronise all efforts, because there’s every indication that the evolution of the LNG industry and the development of the vast shale gas reserves in the northeast are going to require a permanent solution, a structured approach that can deal with the evolution of the industry.
We think that there needs to be a much longer approach that involves the government, the industry and the communities in order to deal with this properly,” Griffith said.
Quoting the former premier of Alberta, Peter Lougheed, who: “In 2006 he spoke out…against the rapid expansion of the oil sands. ‘The Alberta government has let the development get ahead of the infrastructure,’ said Lougheed in a brutally frank interview with the Institute for Research on Public Policy. ‘When you have that happen, you’re going to start to have to pay a price for it.’
“Lougheed’s solution: ‘What is the hurry? Why not build one oil sands plant at a time? I hope the new government in Alberta will reassess this and come to the conclusion that the mess, and I call it a mess, that is Fort McMurray and the tar sands will be revisited.’”
“I caution that Fort Nelson, with the gas that it has in place, has a chance of being a very mini Fort McMurray, and if we don’t react to the situation, we very well could end up with the same situation that Alberta faced with Fort McMurray. Our infrastructure is far lacking the growth that northeastern B.C. is going to see. If we look at the timeline of LNG plants, we have to start five years before the completion of LNG plants to have the infrastructure in place,” Streeper said.
“A common misconception that is happening right now. It is not the LNG plants that are going to be the main structure of this. It is going to be the area where the gas is being produced and drilled for.
“Without the gas that we have in northeastern B.C., we don’t need the LNG plants. But with the combination of the gas we have in reserves and the plants we’re going to build, this could turn out to be a trillion-dollar industry for the province of British Columbia.
Streeper urged the committee to really consider what we’re doing. “We have to have the infrastructure in place to have the residences for the people working in the patch. It was stated that companies are already moving in there. They’re already building facilities, but they’re flying their employees in and out. I don’t think this is beneficial to B.C.”.
One committee member who visited Fort Nelson six years ago commented that there are now no lots available.” In that part of the world there is land, land and more land. I fail to see why we can’t break the logjam somehow and relieve you of this problem where you’ve got all of these jobs and yet no one can live in your town. It’s bizarre. It’s got to be addressed…so what’s the problem?”
“Well, you are, or the province is, the owner of the land. This is not the first time we’ve come and said that there is a land issue. So far nobody has taken the problem, other than our MLA, Mr. Pimm, who said: “What is the community going to do?” Streeper said.” Land is not the only problem. Infrastructure is needed on the land — water, sewers, streets, roads, power, gas. Who’s going to pay for that?”
“We don’t have the financing to go ahead, and we are not developers. We cannot do this alone. We need help, and the only people that we can see that will be able to help us is the provincial government.”
“When we were working on doing all of the research around creating a regional municipality — which was basically to dissolve, if you like, the regional district in the town — we were looking at incorporating into a municipal boundary 10 per cent of the province of British Columbia. That’s how much of the province is inside the boundaries of the Northern Rockies Regional Municipality.”
“A companion argument and paper that we advanced at that time was that this was a tremendous opportunity to use this new local government as the platform for integrated and coordinated planning of all the development within the boundaries. We proposed that to the government several years ago. In essence, we wanted to see a structured process put in place that would have the provincial government with a properly empowered set of representatives that could coordinate the provincial interest… All the major companies in that area are already organized as the Horn River Basin Producers Group to achieve exactly that end and purpose. But there needs to be a matching committee structured provincially that has some teeth and some authority, because what you’ve got right now is a very small municipality, 6,000 people, trying to deal with Northern Health over a complete shortage of doctors. You turn around and you’ve got to try to deal with the Ministry of Highways over the Alaska Highway corridor….go right down the menu. The municipality has to try to deal with every ministry in the government, in one way or another. It’s an impossibility. You just don’t have the resources or the capacity to coordinate or synchronize the effort,” Griffith explained.
The municipality has a plan but is afraid that it will be left to deal with 11 and 12 ministries in its attempt to implement it. This has already been enunciated in the Radke report.
“You need to have a synchronized structure with everybody at the table.”
When asked by the committee chair to priorize the infrastructure needs, Streeper said the top priority was housing. “Housing is needed for 640 people. We have zero lots available for sale right now. We need to build new residential subdivisions in an orderly manner. Again, these subdivisions will rely on water, sewer, power — the whole works for a subdivision — but the water in that area is not a substantial amount to keep going with subdivisions. We need long-term plans of what we’re going to do for water. We need long-term plans of what we’re going to do for sewer. So as the town expands — and it has the possibility of expanding into the 10,000 to 15,000 people range — the current infrastructure, as far as water and sewer, is not capable of handling that.”
“We have a swimming pool now that is 35-years old. We can’t even get filters for the filter system. It’s losing water. We don’t know where.”
“A lot of our infrastructure is aged. It is not efficient. It is not up to modern designs. When you’re also talking about residents, you’re talking about quality of life. You’re talking about recreation. You’re talking about activities for the families. You’re talking about activities for the children. We lack this. We have to bring Fort Nelson up to a modern standard.”
“We’re not asking for anything more than any other community has in B.C. We just want to be equal with everybody else. We don’t want a road running through us that’s got six-foot ditches on each side. You don’t see that in any other community. We just want to be the same.”
Griffith asked the committee to focus on the airport. It’s a municipal airport right now, and it’s handling a vast amount of traffic.  The whole industry right now, everything that’s happening up there — the 3,000 or 4,000 jobs and the benefits that go to the province — is dependent on that airport. That airport is serving a complete regional function well beyond the local domestic traffic.”
The airport is an essential element. It is in a bad state of repair. There’s a full-blown study and report that has been completed and available.
The next delegation was from the Fort Nelson Chamber of Commerce. Jeremy Coté, president of the Fort Nelson and District Chamber of Commerce and Bev Vandersteen, executive director.
The municipality consists of the communities and residents of the area extending from the Prophet River to the Alberta border in the east and the Northwest Territories and the Yukon border in the north. We cover 85,000 square kilometres. We represent roughly ten per cent of B.C.’s land mass. Fort Nelson is the administrative centre for the regional council, and the municipality is home to approximately 6,000 permanent residents. The chamber has 220 members.
“These businesses and residents are the backbone of the provincial economy. Oil and gas royalties alone provide hundreds of millions of dollars in annual revenues for the provincial government, and yet we are still continually hamstrung by cost disparity and unfair taxes that place us at a competitive disadvantage,” Coté said.
“We recognise and support the need to be fiscally prudent. We believe supporting B.C. businesses and workers will in turn support the B.C. economy through spending and taxes. We’ve got six specific areas.
“Number one is the carbon tax. B.C. was the first jurisdiction in North America to implement a carbon tax. We were sold a pilot project that the other provinces would sign on to. Unfortunately, no one has. The continuation of this carbon tax places B.C. and British Columbians at a competitive disadvantage. B.C. companies that contribute to the B.C. economy are losing jobs to non-B.C. companies that don’t. That effectively encourages businesses to operate from or migrate to other provinces, which whittles down the revenue available to the B.C. government from work that’s being done inside B.C. borders.
“While this cascading tax is a province-wide hindrance to competitiveness, it definitely affects the Northern Rockies very significantly. We are isolated. We have little or no access to public transportation. We experience by far the longest cold season, and much of the work done here requires large equipment or long distances travelled. Since we are close to Alberta, Alberta companies are quick to exploit their unfair competitive edge over local companies — very significant issues,” Coté said.
“Some businesses in the tourism industry are remote enough that they don’t even have access to B.C. Hydro’s power grid, and they’re forced to run off diesel generators. This affects their ability to compete as well. So we’re asking that the carbon tax be eliminated as quickly as possible.
“Our second point is: we are asking for support for infrastructure development through Fair Share. Despite continued work and a recommendation from the 2012 Finance Committee, the Northern Rockies Regional Municipality still remains the only North Peace region that doesn’t receive Fair Share funding, which would assist in the development of community and general infrastructure and amenities. The province and the municipality have signed an MOU agreeing to continue to work together on investing in the community, development and infrastructure. However, we were disappointed, to say the least, to see that the MOU stated that it is not legally binding and it should not be construed as any kind of commitment by the province or its agencies.
“It’s clear that everyone recognises the importance of this issue. It’s time for a commitment. Hundreds of millions of dollars in annual oil and gas royalties come directly from this area. With new discovery of new shale gas reserves like the Liard Basin, it is critical that Fort Nelson get the infrastructure in place now, especially as the industry is slow due to low commodity prices, so that we can meet the needs of industry and residents in the future.
“Currently we see hundreds of people fly in and out of the Fort Nelson Airport directly to camps in the Horn River Basin. This places an increased burden on facilities and infrastructure of our airport and very few or none of the benefits. In many cases these people are even from out of province and taking dollars from the B.C. economy without contributing to the tax base and providing little direct spending in our community. We need to promote business and employees to live and work in the north, which in turn will support B.C.’s economy through B.C. spending and taxation.
“Fort Nelson should not bear the cost of the development of the infrastructure needed to support the gas industry when the revenues from that industry go predominantly directly to government coffers.
“In order to meet the immediate and future needs of industry and community, Fort Nelson requires the development of infrastructure through Fair Share payments now. On behalf of our members of the chamber of commerce, we fully support the NRRM in its ability and its efforts to attain Fair Share.
“Our third point is support for community infrastructure for health care. Some of you who have travelled to Fort Nelson are aware it’s remote and isolated. We are approximately 400 kilometres from the next largest service centre, which is not even within the Northern Rockies region, so we need basic health services here. We recognise that we will never have specialised care locally, but we still require the strong, basic health care and, certainly, emergency care as well for our residents and to support the industry.
“There seems to be a disconnect between B.C. Bed and Air Ambulance, and their services need to prioritise remote regions such as ours. Far too often we are placed at lower priority, jeopardising patients, especially in critical situations. B.C. Air Ambulance and B.C. Bed need to be mandated to work more cooperatively with our local doctors and hospitals to ensure timely patient care.
“Maternity care also is the most basic of health services, and unfortunately, it has not been available to Fort Nelson for quite some time. Expectant mothers at this moment still have to travel several hundred — probably 400 — kilometres or more away from their family to deliver their babies, which places a huge burden on young families, of which there are many in Fort Nelson. Expectant mothers are required to leave a minimum of two weeks before their due date, as it stands, and if there is no extended family available, they have to pay for accommodations out of their own pocket.
“This impacts businesses. Employees need extended time away. They struggle to make alternative arrangements, and of course, there’s the stress of being separated. Families should be able to remain in their homes in this very critical time. We would ask the province to review the report by Mr. Brian Spooner, primary health care master plan consultant, which was prepared for Fort Nelson specifically on behalf of the Northern Health Authority.
“This report identifies several needs that are required to establish sustainable, integrated and accessible health services. We ask the province to provide support and to provide funding assistance to the Northern Health Authority earmarked for Fort Nelson for improved health care.
“Item No. 4 in our submission is we need the province to review resource and tourism permitting and agricultural land reserves in the Northern Rockies municipality.
“As we noted in our submission, several recommendations of the 2012 Finance Committee dealt with improving and developing streamlined processes to enable B.C. businesses to get the permits, resources and lands they need to ensure they’re successful.
“This continues to be an issue, however, for many of the businesses here in the Northern Rockies. There’s essentially no private land available in the northeastern corner of the province, so the ability to access Crown land is crucial, and it’s largely the only option available for companies and individuals.
“The potential for growth here is huge, and we need to support local businesses in their efforts to provide necessary commercial establishments and services to the industry in northeastern B.C. and to the residents.
“As part of the B.C. jobs plan, we need to be making processes that are streamlined, efficient and as easy to access as possible for our small- to medium-sized businesses. Small and medium-sized businesses are the backbone of the British Columbian and Canadian economies.
“Businesses have advised us that a large oil and gas company may get a permit in as little as 60 days, or access to land. However, it’s not the case for our small and medium businesses. Often, when an application is filed, they don’t even hear if it’s been received for many months, and we’re looking at an average of about a year to achieve an answer — yea or nay — on an application. In some cases it has taken up to four years. Clearly, this is unacceptable.
“Currently there are no published timelines for completion of permits through the Ministry of Forests, Lands and Natural Resource Operations, so businesses do not even receive acknowledgment. We have longtime tourism operators that have been guiding and fishing in this area for decades who have not received decisions under permit renewal applications, who are now going into their primary seasons without those permits in place. These operators bring new dollars into the B.C. economy through tourism, and many are now questioning whether or not they can remain viable if they can’t get assurance on their permits.
“So it’s important that we support tourism in the Northern Rockies. That’s new dollars to the B.C. economy.
“We need to support the growth of business through the establishment of programs for education. Here in Fort Nelson, it’s really important that we’re able to educate youth and unskilled workers in our community. Many of our youth don’t want to leave the community — in particular, First Nations, who want to stay in their homes.
“It also puts an increased cost burden on our youth when they have to travel out and can’t remain in their communities. Basic industry education needs to be done in the community.
“Finally, we need to support business in the recruitment and retention of workers. That includes supporting things like a group pension plan that the federal government is putting in place or has recommended. This gives our employers of small and medium-sized businesses the ability to provide a pension plan for their workers where they may not be able to do that on their own.
“Our final request, and we did put this forward last year as well, is that Fort Nelson, or the Northern Rockies, should have a northern travel benefit similar to the northern residents tax credit. Currently, it’s an optional item that employers can put on a T4 for an employee, but anybody living up here has to travel, and that should just become a taxable benefit or a tax credit,” Vandersteen concluded.
Pat Pimm asked the chamber delegates if they had taken advantage of the carbon tax poll by the finance ministry and was told they had.
One committee member asked Mrs Vandersteen if the land was made available to housing where would the people come from. Right now, how many workers are coming from other B.C. locations and how many from Alberta? Do you have a rough idea in terms of percentages? What percentage would be coming in from other locations in B.C., flying in, or are the majority coming in from Alberta?
“At the moment,” she said, “it seems to be Albertans with some coming from the eastern provinces as the lower mainland.
“My husband, who works for Qwest Helicopters ferrying people to the camps, said they move upwards of 700 people a day during the Tuesday and Thursday shift changes.”
A member of the committee said; “You mentioned that a business or individual who files an application takes an average of a year to achieve. In some cases it takes four years to gain access to the land. Can you just explain that? It seems a very shocking statistic and a very long wait. I’m very surprised. We’ve heard that the minister has claimed that they were working to remove those backlogs. So can you just explain that further?”
The problem has been staff shortages. This has improved somewhat as a result of locating a front service office in Fort Nelson. “There is not enough progress on this,” Vandersteen said. “I guess my biggest issue is that there are no published timelines, so anyone walking in with a permit application gets no expectation of when they’re going to hear….one guy may take a year and other three years. It’s a big issue, particularly with our tourism operators right now as well, because they filed January, February and still don’t have permits in place (in September).”

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