National Post (National Edition)
HOW ARRESTED DEVELOPMENT IS HURTING THE NORTH.
Arrested Development
“I’m older than this town,” Fred Carmichael says as he steers his lumbering Ford F-350 truck through a residential neighbourhood of Inuvik, Northwest Territories. But Carmichael, 81, is among a shrinking generation of Gwich’in who remember when this small northern outpost was nothing more than a few tents erected along the Mackenzie River.
Carmichael grew up in his family’s log cabin and worked on his father’s trap lines, eking out a living from the region’s dwindling numbers of fox, hare, wolf, minx and muskrat. He set out on his own when he was 17, and eventually established a small aviation business that still operates today.
“We soon realized that in order to survive up here you have to get into some kind of business or find a steady job, which was hard to do,” he said.
The people of the town, like Carmichael, are acutely aware of their ancestral way of life, and many southerners still maintain an outdated view of the North. Yet Inuvik embodies an undeniably industrial character. Heavy machinery is too expensive to transport south after it’s been broken down, so the town’s industrial sector is littered with successive generations of rock crushers, trucks and bulldozers that serve as impromptu museum exhibits.
The town’s attempt to shift toward a more modern economy is perhaps most evident in the proposed $7-billion Mackenzie Gas Project. The joint venture between Imperial Oil Ltd., ExxonMobil Corp., ConocoPhillips Co. and Shell Canada Ltd. was proposed in 2000, and includes a major pipeline that would transport natural gas from a port in the Mackenzie River Delta to markets in Alberta and British Columbia.
But after decades of regulatory delays and volatile commodity prices, the project now seems unlikely to ever go forward, leaving residents of this relatively young town to contemplate an uncertain future.
Inuvik wasn’t officially established until 1953 and was built as a kind of refuge after the nearby community of Aklavik suffered repeated flooding. Since then, Carmichael has watched the town expand into a municipality of 3,300 people that boasts a recreation centre, hospital, collection of hotels and CIBC branch.
As he drives through the town’s industrial quarters, he points out a number of construction shops, welding outfits and transport businesses, describing each of the owners by his first name.
The establishment of Inuvik coincided with a broader economic shift in Canada’s North — and, with it, the dramatically altered lifestyles of the people who dwell here.
That change hasn’t been without hardship. Government largely subsidizes housing, while summer unemployment numbers in the N.W.T. reached a staggering 30 per cent — the highest in the country.
A sluggish economy has made these problems even more acute. Volunteers at the local homeless shelter say they are stretched increasingly thin, while food bank organizers warn that Christmas donations are well below the necessary amount to meet demand.
Many locals say the Mackenzie Valley pipeline would go at least some way toward combating these issues. Many of the main aboriginal communities supported the project, and together formed a consortium under the Aboriginal Pipeline Group (APG).
As chairman of the APG during the consultation process, Carmichael and his colleagues managed to negotiate an historic one-third stake in the project for the aboriginal groups it represents. The agreement marked the first time aboriginal groups were given substantial ownership over a major energy infrastructure project, and was lauded by then-finance minister Jim Prentice.
But the pipeline, approved in 2010 after many years of consultations, still hasn’t been built.
The anxieties of some people who reside near the proposed route, as well as a long and calculated campaign against the pipeline by environmental groups, caused major delays in public hearings. The Dehcho group in particular didn’t support the project, citing unsettled land claims with the government.
“It was a long, drawn-out process,” Carmichael said.
The development of the Mackenzie Gas Project could have transformed the region. The proposed contract gave the APG a one-third cut of the total revenues from the project, which would be divided between a relatively small group of 15,000-odd aboriginals who are represented by the group.
By the time the project had been approved, energy companies had unlocked massive new pockets of natural gas reserves in the U.S. and Canada, pushing gas prices downward and making the project uneconomic. In June 2016, an application by Imperial Oil
Ltd. to extend the deadline of the project to 2022 was approved, which perhaps puts a final deadline on a pipeline that has been in the making for decades.
The project was first proposed in the 1970s as an oil pipeline. In the face of opposition, Thomas Berger, a justice with the Supreme Court of British Columbia, was assigned to consult with stakeholders and produce a report on the best path forward. His findings became known as the Berger inquiry, but he ultimately decided more time was needed to make a decision. The project was delayed and eventually scrapped.
“It’s the project that never goes away, but also never gets built,” said Jim McDonald, the mayor of Inuvik.
Residents of the town now hope the pipeline will drive the development of natural gas in the region, as the N.W.T. sits atop 16 trillion cubic feet of technically recoverable natural gas. But without a viable transportation route, compounded with the remoteness of the North, the reserves have yet to be developed.
The pipeline would also funnel a cheap supply of gas into town for heating homes. Inuvik has primarily burned diesel to supply residences, but recently constructed a liquefied natural gas (LNG) facility for a cheaper and cleaner fuel source. In the absence of the natural gas pipeline, the town trucks in much of its LNG from southern B.C. at great expense.
McDonald said the average monthly cost to heat a 1,000-square-foot home in Inuvik is around $600.
For residents, the peaks and valleys of resource development are familiar. Following the downturn of oil prices in the early ’80s, oil and gas activity in the region dried up.
“After the Berger inquiry, things kind of shut down,” said Bob Gully, who owns Bob’s Welding Ltd. “People went broke. A lot of good friends of mine went broke.”
Gully, 75, a Gwich’in man, was another to embrace the entrepreneurship lifestyle. He earned a welding certificate in Edmonton, and then returned to Inuvik to launch a small welding outfit. During the oil rout of the ’80s, he began diversifying his business to stay afloat, entering into snow removal, road construction, rock mining and fuel distribution.
Today, Gully sees little opportunity for his town outside natural resources. Like many residents, he is of two minds about the changing way of life in the North. He appreciates what industry has done for him, but laments how oil and gas companies disappear the moment prices tumble. “They’re there one day and gone the next,” he said.
Above all, he worries about the next generation, some of whom see few opportunities ahead. Many feel they are victims of a broader system, and alcoholism and drug use is rampant despite a quality of life that has markedly improved from decades past.
“Younger people don’t know what it means to see hard times,” he said.
For now, the town is depending on make-work projects to stimulate activity. The construction of a new 138-kilometre road from Inuvik to Tuktoyaktuk, on the shore of the Arctic Ocean, will substantially improve mobility between the two towns when it is completed in 201718. A seasonal ice road is the only other conduit from one to the other.
But as construction of the project comes to a close this summer, residents of Inuvik are concerned about what will sustain employment thereafter. “It’s going to get pretty quiet,” said Richard Selamio, an Inuvialuit truck driver working on the project.
“I don’t even want to think about that,” said Floyd Roland, a former Inuvialuit premier of the Northwest Territories.
As premier, Roland was part of the negotiations that eventually established a $500-million socioeconomic fund to help small communities along the pipeline route prepare for an influx of investment.
He said a number of local entrepreneurs and investors put money into construction outfits, hotels and other services in expectation that the Mackenzie Valley pipeline would eventually go through. With the project looking increasingly unlikely, the struggle now is in keeping residents busy.
Roland bristles at the thought that people in the North should revert to a more traditional way of life, a proposition he said is badly oversimplified. “I tell them: You wouldn’t last a month,” he said.
Imperial, for its part, said it would be open to pursing the project depending on where commodity prices go. The company still employs a local liaison who works out of a small office along the town’s main road.
For the residents of Inuvik, however, the project has been delayed so long that it seems to no longer register.
“I don’t think about it,” said a young heavy machinery operator sitting at the bar of a local pub. He pauses, briefly ponders the future of the project, then sets down his beer. “I just work.”