From the yearly archives: 2012

Things are not going as planned – and it’s not what industry stakeholders pinned their hopes and investments on. Success hinges on LNG – and everything that goes with it – but its future is uncertain.

The BC oil patch is facing one of its slowest winters in 10 years, says one expert. Companies are slowing or shutting down and the usual industry optimism is growing scarce.

And Fort Nelson Mayor Bill Streeper, who has operated oil patch service companies for decades, predicts there’s no end in sight – even beyond the winter season.

“We’re facing the November blues in the oil patch,” said the usually upbeat Streeper, who emphasized that the drilling doldrums will continue until corporations have some certainty about shipping liquid natural gas (LNG) from the Northeast through ports on BC’s west coast.

“We’ll be on the downside until a definite date is set for shipping LNG.”

The downturn is particularly evident in the once highly-touted Horn River Basin play. Fort Worth-based Quicksilver Resources said recently it has agreed with a subsidiary of TransCanada Corp. to delay a pipeline to its Horn River shale gas assets by 15 months.

While reporting second-quarter results, Quicksilver said it had decided to suspend further spending on the northeastern BC play for the rest of 2012, despite drilling success, because of depressed natural gas prices. It reported that it had reached an agreement with Nova Gas Transmission Ltd., a subsidiary of TransCanada Pipelines Ltd., to delay the targeted in-service date of the Komie North pipeline and meter station facilities from May 1, 2014 to Aug. 1, 2015.

Quicksilver said it would be looking for partners and better market conditions before moving capital back into the dry gas play. The Komie North section of the proposed Horn River Mainline is expected to be composed of about 100 kilometres of up to 91-centimetre (36-inch) diameter pipeline. The pipeline would be approximately 75 kilometres northeast of Fort Nelson.

But Quicksilver also announced it has struck a deal with a unit of Royal Dutch Shell PLC to jointly develop oil and gas properties in the Sand Wash Basin in northwest Colorado. Quicksilver has an obligation to invest $300 million over three years in the Horn River. The company said it has already invested 60 per cent of that.

Streeper guessed Quicksilver’s action wasn’t so much about prices – since the dry gas stock in North America already exceeds a 250-year supply so prices likely will stay low – as it was about having certainty as to when product can be shipped to overseas markets as LNG. He said most companies don’t want to drill more wells until they know when they can ship the product. At present, they’re just doing a few “commitment” holes to keep their leases intact.

“They need a day when they know it can happen,” said Streeper, who added the cumbersome process of getting environmental and First Nations approval is causing market uncertainty. “If Canada says wait 10 years (to get approvals) then these companies may as well get into another industry – or another location.”

Streeper said the doubtfulness of environmental approvals for pipelines and tanker shipping off BC’s west coast, and the reluctance of many First Nations to sign off on them in the face of growing public concern about their safety, means Canada is in danger of falling behind other gas suppliers who are rushing to meet growing demand for the product in Asia. China, for example, is ready, as evidenced by the 27-plus stations they have available now to receive LNG. In this heady environment the Australians, who aren’t hindered by the same environmental and First Nations restrictions as Canada, are ready to pounce. And even the Americans are bringing Prudhoe Bay gas south, made easier because they have implemented a blanket First Nations approval for projects like this throughout Alaska, saving the need for project-specific First Nations agreements

“The environmental concerns and First Nations (delays) are killing us here,” said Streeper. “We’re tied up. We have people telling us to ship today but the companies naturally aren’t prepared to stick their necks out.

“We can’t get our shit together.”

For things to improve, the proponents need to be able to “give specifics” on when the infrastructure to ship LNG will be operational, the mayor said, explaining that different companies have different concerns. Shell, he said, isn’t worried about the current low prices of natural gas – for some time hovering around $3 per million British thermal units – but they don’t have the necessary environmental or First Nations approval for their pipeline and LNG plant projects. Other players in the Horn River Basin such as Apache, Encana and EOG have that, but are concerned about prices and the fact that no sales contracts exist due to shipping uncertainties.

“We have so much up in the air right now. Who’s going to start it? We need to create our own market but the marketing is up in the air,” said Streeper.

And more issues threaten to come into play, each with its own potential impact, he added. “The whole damn thing depends on the feds and what happens in May (BC provincial elections). That party, the one with three letters in its name, if it forms the government, said it will study fraccing. That likely means they won’t allow fraccing until the study is done and that could take 2-3 years. That creates more uncertainty and (NDP leader Adrian) Dix hasn’t come out with his platforms.

“That means people have to be cautious.”

Streeper was equally critical of his fellow municipal politicians who, at the recent Union of BC Municipalities Convention, voted against more tanker traffic off the province’s west coast. While some media and environmental groups have claimed this as a significant victory, Streeper noted that the difference for and against was just eight votes, which means just four more people voted against tankers than for them.

“So, roughly 50 per cent of the municipal politicians are saying no (to more tankers) but they still want the dollars for their infrastructure improvements. Don’t they realize how much of the provincial budget comes from the oil and gas industry? Where do they think this money is coming from?”

While Streeper frets about the individual stumbling blocks facing the industry right now, he also sees lost benefits for the whole economy of BC because of the uncertainty.

“It’s so frustrating,” he said. “We could be one of the most prosperous areas in the free world.”

 

David Rushford is now at the helm of the Horn River Producers’ Group and he says he’s looking forward to help steer the group through the currents they now face.

There is no doubt that, with the importance of the Horn River Basin and despite the recent flattening of activity, the person at the helm of the Horn River Producers’ Group is someone to watch.

Taking over from long-time chair Rob Spitzer, is David Rushford, Quicksilver Resources Canada Inc. Senior Vice President and Chief Operating Officer.

David Rushford, Quicksilver Resources Canada Inc. Senior Vice President and Chief Operating Officer.

David Rushford, Quicksilver Resources Canada Inc. Senior Vice President and Chief Operating Officer.

“Rob is moving on to some new areas and they were looking for a new chair…I put my name in for chair and was chosen,” said Rushford about the change.

“The Horn River is probably the largest long-term asset we (Quicksilver) have and is obviously very important to the company…when you’re operating in a remote area like that there are a lot of infrastructure challenges, there are a lot of obligations we have with the First Nations in the area, and of course, it is really important that everybody cooperates and works together to minimize our footprint up there.” And that has been the focus of the Horn River Producers’ Group since the start – to work together toward a common goal.

Rushford said he thinks the collaborative approach intended by the formation of the HRPG has been successful because it created a “common window for social license to operate up in that area”.

He, even as he admits that the slowing down of activity has had impacts on everyone, added that he doesn’t see it as a negative but rather as an opportunity to have the time, a “breathing space” if you will, to deal with the government, First Nations and the Northern Rockies Regional Municipality, and that’s positive, he said.

“I think all the producers would tell you that they want to work with the regulatory authorities…to improve and smooth the processes and a lot of that work has been ongoing over the last number of years,” said Rushford. The routine processes for drilling wells and licensing facilities are all done through the OGC and have gotten a lot better over the last number of years. And the government is trying to streamline those where they can. The group’s relationship with the regional municipality has been excellent he noted.

All of the producers, he said, are struggling through low gas prices and that affects everybody. Impacts on the immediate area and the companies that work there, the service sector beyond that area and even on the provincial revenue are clear, however, as Rushford steps into his new role, much will remain unchanged.

“I don’t think the issues are changing too much up there, things are slowing down – I’ve been through lots of booms and busts in the oil patch and this one will come and go as well.” It’s a time to “carry the course”.

Road infrastructure, the alwayscontroversial pipeline infrastructure and the provincial regulations for working in that area are all issues the group has been, and will continue to address. And there is also the environmental component of operating in any area.

The public has been consistently vocal about the issue of water management. Rushford is of the opinion that all the operators would say they are putting a tremendous amount of energy into their water management plans.

“Many of the active operators up there have been working very closely with the Ministry of Environment and BCs’ Oil & Gas Commission on regional water monitoring networks…and looking for alternate sources of water,” said Rushford. “I certainly believe the water issues are very manageable up there. They just need some science and time put into them.” Whether the challenge is money, infrastructure, the environment or regulatory process, the area is going to play a significant role into the future, he said. And until then, the producers, like everyone else, are going to have to work through the consequences of the low gas prices.

“On the policy side, everything that the federal and provincial governments are doing in terms of getting these pipelines and facilities built out to the west coast are things that they need to be moving forward,” said Rushford.

On a more personal note, and from the HRPG, Rushford said: “We’re up there for the long haul and we’re going through a little hiccup here with the low gas prices, but the Producers’ Group – all the members – are in there for the long haul.

When asked the magical question that everyone is hoping to find an answer for, Rushford said: “I’d be the most valuable person in my company, and maybe in the industry, if I had a crystal ball that could tell you what future gas prices would be so I will have to take a pass on that question”. Apparently he doesn’t know just when the situation will move from its current stalemate either.

“I think all the producers would say we have to develop alternative markets for our gas, and for Canada, that really means getting the west coast LNG export market up and running,” he said. Closer to home, he admitted that there were long-term opportunities in the domestic market for the transportation and power sectors. Regular pipeline gas, compressed pipeline gas and LNG all offer potential that is worth exploring, he said.

 

Small businesses make up a sector critical to the economic well-being of the provinces and the AB and BC Chambers of Commerce are looking toward the provinces to do their part to address the very real challenges that small businesses face. Owning your own business isn’t as carefree as some might fantasize.

Imagine you are a ‘typical’ small business owner. Perhaps you inherited a family business or, more likely, you gained experience working for someone else and then decided to strike out on your own. Running your own business is a dream many have had over the years.

And many have failed.

Why? What causes the dreams of a lifetime, that good old free market entrepreneurialism, to crash and burn? Of course, some just aren’t cut out to lead; they’re more comfortable with – and more suited to – working for others. These are the ones who fly by the seat of their pants, with no real plans in place, spending the cash as quickly as it comes in. But what about the others? They have plans to go with their dreams, in some cases taking over an established business or finding a niche market that isn’t being served by anyone else. Success should be theirs, right? Not always. Regardless of the circumstances, the economic road is littered with the corpses of businesses that couldn’t make it past the first 3-5 years of operation, or whose fortunes failed under new ownership despite a longer track record in the marketplace.

Whatever the circumstances, few who have tried it will deny that running a business is extremely hard work. And sometimes that difficulty is compounded by external forces you can’t control. Certainly the BC and Alberta Chambers of Commerce see some serious external factors plaguing small business in their respective provinces, though the analyses differ somewhat.

“Labour is our biggest issue; getting skilled and even unskilled labour,” said Ken Kolby, President and CEO of the Alberta Chambers of Commerce, noting that Alberta’s unemployment rate provincewide is 4.4 per cent but the “reality” is that there is full employment for those willing and able to work.

That’s largely because Alberta’s hot economy largely withstood the downturn that plagued much of the world in recent years – perhaps because small business owners there learned from the recession that hit them the early 1980s.

“We were blessed this time and the downturn was shallow for us,” Kolby said. “Our small business people went through a downward shift in the 80s and this time they saw the signs and backed off on their expenditures. So the good ones were able to keep their employees even though in some cases they had to reduce wages. But they’re the ones with ultimate employee loyalty.

“We’re trying to recruit from other parts of Canada and elsewhere but it’s hard for small business because they can’t pay what other (resource-based) businesses here can pay.”

Traditionally, the province’s small businesses have not gone offshore for cheap labour, because it’s costly to recruit and house them, he added. Senior government has removed a major stumbling block, however, by introducing the Accelerated Labour Market Opinion (LMO), Kolby said. To get an LMO an employer must show efforts made to recruit and/or train willing and available Canadian citizens/permanent residents; that the wages offered are consistent with the prevailing wage rate paid to Canadians in the same occupation in the region; that the working conditions for the occupation meet the current provincial labour market standards; and, any potential benefits that hiring a foreign worker might bring to the Canadian labour market, such as the creation of new jobs or the transfer of skills and knowledge.

“Government recognized it was sheer stupidity to require LMOs from good employers,” he said, especially when shortages were obvious.

Instead, Alberta must increase awareness of the province itself and its opportunities, he explained, especially now that some people are again considering relocating there. But the province needs to do a better job of marketing itself, he added. Americans and those from other countries don’t know our geography – and neither do some Canadians, apparently. “People need to recognize that if you’re in Toronto and looking to relocate, Alberta is only a threehour flight away,” Kolby said, acknowledging that some think the entire province is remote, without basic amenities. And nothing could be further from the truth.

Kolby said a better marketing program would show those considering a move here the “reality” of life in this area, along with what credentials are needed to obtain work. Also important are “settlement services” outside major cities. With more immigrants ready to move to smaller communities, these services are vital to helping other nationalities learn our customs and feel comfortable in communities where they’re very much a minority, and the municipalities involved should have access to funding to provide those services, he said.

Businesses in British Columbia face the same problems, of course, but BC Chamber of Commerce President and CEO John Winter sees other issues as well.

“We can’t treat business as a single entity. We can’t generalize,” he said. “Look at the HST (harmonized sales tax) for example. There was support for it but opposition came from parts of the small business sector, too.”

Winter said businesses continue to struggle with the bureaucracy and red tape. “Many (businesses) aren’t in compliance with the regulations – not because they don’t want to be but because they have no expertise.”

Winter said that, of the 390,000 businesses in BC, 70,000 are micro-businesses of 1-4 employees with owners who have no formal education beyond high school. “The ability for them to grow and develop is limited by their skill shortages,” he said. Those business owners don’t understand the best ways to hire and fire employees and they face difficulties in getting their business to the next threshold.

“They hit a wall at the 2-3 year mark when if they don’t grow then they’ll be out of business.”

It isn’t all doom and gloom, though. Winter said small business benefits from a dual tax rate that sees small business paying less tax than corporations above the $500,000 threshold. While he worries that any kind of preferential treatment hinders growth, he recognizes that it’s government’s call.

In BC, business largely relies on the resource sectors and has to weather the fluctuations that accompany those industries. Winter used as an example the 500 travelers who get off the ferry from Port Hardy on Vancouver Island at the coastal port of Prince Rupert, on their way to Prince George. The travellers may spend two nights in hotels before they get there but, since that ferry only arrives every two days, this traffic isn’t enough to sustain the businesses catering to them along the way. Thus, those businesses can’t grow as they need to because their cash flow is uncertain. “It makes it tough,” said Winter. “How do you cope? The answer is, you don’t.”

The BC Chamber is doing what it can to help. Winter said that on Aug. 1 they launched an 18-month training program for micro-business owners who only have high school education. The program can provide up to $1,500 to improve the efficiency and/or productivity of a business by providing training in areas such as bookkeeping, marketing and sales, management, computing and social media, for example. The Micro-Business Training Program is set to run through March 31, 2014 with the last applications being accepted Dec. 31, 2013 – dependant on funding availability. The program targets a minimum of 1,200 participants and funding support is available to eligible applicants on a first come, first served basis.

This program is available to every eligible business owner across the province, with applications available from local Chambers of Commerce, and training options are available in every region, including online or e-learning options. Funded by the federal and provincial governments, ironically it is proving to be so popular it may run out of funds within the year.

Meanwhile there’s optimism in Alberta, where the future looks “very bright” for small business, said Kolby. But, even so, there are concerns about the lack of succession planning in business, especially since the owner’s children may not fancy working 14-16- hour days.

“Then, if there’s no buyer, they’ll just lock the doors and walk away,” he said, “and that’s scary for the whole economy and especially smaller communities where these businesses are key. That’s how we lose the local history and knowledge. “We may be seeing that on a regular basis in future.”

With the labour shortage set to increase as ‘baby boomers’ get set to retire in unprecedented numbers, Kolby said that the tax structure doesn’t encourage people to stay in the workforce longer. “People working later get hit harder (by taxes),” he said. “There’s no incentive for people to work longer or to come back to work. They (government) needs to incent people.”

Speaking of incentives, Kolby also had an idea that could encourage workers to relocate to busier parts of Canada from those areas with high unemployment – workers in busier provinces should pay lower Employment Insurance premiums, he said. “Right now, BC, Alberta and Saskatchewan are supporting the rest of Canada. This would even it out. The feds say it’s too complicated to have different rates for different areas but really, it’s all done on computer so it would be easy to calculate.”

Government needs to have a better plan for sustaining small business through the most difficult times, said Winter, noting that the economy of British Columbia is actually smaller than that of the city of Houston, Texas.

“Our big problem is that while there’s growth in the GDP (gross domestic product) there’s no real growth in wages,” he explained. “So there’s no real spending power. It’s all in benefits.”

But as Small Business Month is celebrated in BC and Alberta, there is no question that this sector is vital to the their economies. Small businesses (under 50 employees) account for about 95 per cent of all businesses in both provinces, bringing in roughly 30 per cent of their respective GDPs. And with small business employing about a million workers in BC and just fewer than 500,000 in Alberta, it’s clear that a viable and growing small business community is necessary to our economic wellbeing.

 

Grande Prairie natives and entrepreneurs Mike Reeve (MR), Ryan Blais (RB), and Jarrett King (JK) sat down with Center for Research & Innovation to discuss the business potential for entrepreneurs in the Peace Country, and why they chose to start their own businesses here at home. This is the second and final installment.

Q: What advice would you give a new entrepreneur?

MR: Don’t be scared. One of the first things I encountered was the fear of doing it on your own. But taking that leap, it was worth it.

RB: There needs to be a very concentrated research period before you jump in. Identify what tools you’re going to use. If you’re trying to patent something CRI is a perfect example. In my case, I’ve had a lot of help.

JK: My situation was a little different in that my past business relationship ended very poorly and so I had no choice to start over. What I’d tell people in a reactive situation is be willing to put yourself out there. That’s the hardest part. It’s like being a comedian and going on stage for the first time.

Q: Where did you go to teach yourself?

MR: I teach myself almost everything online. Nowadays you can Google search almost anything. That’s what I find is the best source.

JK: For me it’s more of a mixture because you can’t teach a lot of the things that we do on the Internet. A lot of what I’ve learned has been taken from really talented people and paying attention to what they have to offer. A lot of it for me is sitting and listening.

Q: Why did you choose to stay in GP?

MR: Although industry is similar around Calgary, I’d have to have all these employees and quit doing the fun things myself. I wouldn’t be the guy hanging from a helicopter chasing jet boats.

JK: And if he ever has a bad day he can always run a stock car into mine. We grew up at the racetrack and I think for me, a lot of it is the lifestyle. I would love to say that I could go to work in downtown Calgary and go to nice clubs and meet new people but for me it’s about the quality of life here.

RB: If you’re entrepreneurial there’s a lot of opportunity here. Canada’s one of the top countries in the world to live in. Within that, Alberta is the economic powerhouse of Canada, and we’re in the region where a lot of it’s happening. The other reason is GP is still small enough that you know everyone. I have a very strong network here. To walk away from that would be silly. Yes there’d be a bigger network in Vancouver, but I’d be a small fish.

JK: This pond is rather under populated so there’s a lot of opportunity. And it’s going to be that way for a long while. View full interview at www.grpc.ab.ca/community/cri

 

Potential conference overload has organizers thinking about restructuring.

For Tervita’s Doug Preete, attendance at the 2012 BC Energy Conference in Dawson Creek, BC was a given. After all, conferences like this – and the trade shows attached to them – are a chance to showcase the company and make the contacts necessary for doing business in the oil and gas sector.

“We come here to let the community know what Tervita does and the directions we want to go in in the patch – and the environmentally-friendly ways we operate,” he explained. “And there’s usually a good representation here by potential clients.

“It’s a great opportunity to network with others in the business and our clients, especially since the people are always changing and you see people taking on different roles.”

Organizers says this year’s show attracted about 300 people and nearly 50 trade show booths. There was a wide array array of speakers on subjects ranging from Women in Industry, Meeting the Labour Challenge, Green Energy Technologies, Renewable Energy and the Environment, Innovative Technologies in the Industry, plus updates from industry and community leaders. In addition, participants got to hear from BC Energy Minister Rich Coleman and Dawson Creek Mayor Mike Bernier, as well as other regional politicians.

Bernier said energy conferences like this one are important as they give companies a chance to connect. “It’s important for us to reach out to the companies and get all the players in the same room,” he said. “And we appreciated hearing from the energy minister about the importance of this region for the province. That’s good for the companies to hear.“It wouldn’t happen without the support we get from the industry and the sponsors. We really appreciate their involvement.”

Nevertheless, Bernier said, this year’s conference (they’re held in rotation with Fort St. John and Fort Nelson) wasn’t as well attended as he would have liked. “Certainly the turnout wasn’t as large as we’d hoped for,” he admitted. “I’m not sure if that’s because everybody’s busy or because there’s a slowdown.

“I think it could be that we’re seeing a bit of conference overload. With the Fort St. John and Fort Nelson energy expos (smaller trade shows) also being held this year, it’s a challenge for the companies to be at all of them.”

Bernier said organizers are beginning to consider the timing of these events, with a view to having them, perhaps, every second year.

Something needs to be done, agreed Preete. “This show has been very quiet,” he said. “I thought there would be more. I know it’s a work in progress but you need lots of activities and people, more different services and clients. The activity level is key.”

Preete said it’s hard for companies to justify attending such shows if attendance is down. Noting that attendees at this show consisted mostly of the exhibitors, he suggested more effort should go into attracting the public.

One way to accomplish that would be to invite high school classes to attend the conferences, for free as part of a field trip, he said. That would put the employee-starved industry in touch with the workforce of the future and would give soon-to-be graduating students a chance to talk with potential employers.

“With the employee shortage everyone is experiencing, this would give the kids a chance to see all kinds of services and job opportunities for them,” Preete suggested.

But he said a format change is necessary if such conferences are to flourish in the future. “Hopefully this can be used as a learning experience.”

 

Peace-born Bob Fedderly gives the impression of being a typical soft-spoken, unassuming country boy, but if you stop at that you would be grossly underestimating him.

As co-owner of Fedderly Transportation, his knowledge of the oil and gas industry is prodigious and his passionate opinions, backed by experience and research are usually worth a second thought – even if you don’t agree with him.

And as anyone who knows him will attest, he has opinions on the nature of the oil and gas industry: where it has been and where it’s going.

“I’m optimistic about LNG, but maybe not to such a high degree as other people are,” he said. “What I see is that domestic use of LNG should be more prevalent…we’re stepping over a market that’s right here. It’s almost like we’re deliberately avoiding it.”

He recognizes that producers want to get it offshore so that “they can get the big multiple on it”, but he speculated that when the LNG hits the market, the “multiple” isn’t going to be as big as expected. He noted that since they are already selling oil domestically and making a profit from that, they may be less willing to switch and use gas.

“We’ve trained them to sell us what we’ll buy,” he added.

He also sees that even though there is some slowing of the economy in the region, that the air of anticipation is not gone and if people are working for the right companies, there is still plenty work to do.

He advises that “putting all your eggs in one basket” isn’t a good business decision, noting that there are some “really gargantuan producers here right now” that might well turn around one day and “turn the switch off” – a perilous situation for anyone locked into just one arena – where you “might find yourself with no eggs”.

He said he would also like to see the local businesses be the “price taker not the price setter”. Citing the forestry industry as an example of where the end user was telling people what they were going to get paid – and not to the benefit of the players in that sector.

He expressed some reservations about the direction of relationship between vendors and producers and suggested that there were perhaps more effective processes between the two.

“There are challenges,” he added.

And whether everyone agrees with those thoughts, most can agree that anyone who can operate a successful business in the often volatile resource sector knows more than one or two things about what works and whatdoesn’t. Fedderly is no exception to that.

“When I look around and see people that are successful, they have a few things (in common),” said Fedderly. “They have build and held onto a team. They kept pace with things a little bit. They built a little equity to fall back on when things are slow. A strong work ethic is one of the big ones people dwell on but there’s (also) a little bit of luck involved and there’s certainly you have to be a little bit of a gambler but I don’t recommend it to be full-on gambling.”

Like so many others, he started in the oil patch working for someone else out of school and watched and learned from people that had thekind of success he wanted.

Unlike a lot of others, he said, “we never tried to spend money we didn’t have”. Often purchasing used equipment and updating it to what he wanted instead of always buying new, and while he admits that approach can hold people back, he said “it can also help you keep your feet on the ground too”.

It’s a cash flow world and Fedderly’s strategies have served him well over the years, but he added that in the tougher times, it has been equity that has pulled them through.

“I worked around people that had that philosophy. My own dad ran his business that way and I worked at Swanberg Brothers Trucking with my own truck and I could see how that philosophy helped me there,” said Fedderly. “You don’t go from crawl to fly and there’s a few steps in between.”

While he has been somewhat conservative in spending, he also has found a way to be the first in offering several things. In 1988 they worked with Aspen Trailer on a couple of new trailer designs and had some specialized trailers that others didn’t have at that time. But it didn’t take long for people to follow suite.

“You’re not unique for very long in this world,” said Fedderly.

He added that having the support of his wife and brother (co-owner) and other family members was very helpful along the way. In the same breath, he acknowledged the role of the people that have been with them for many, many years have played in supporting his efforts toward success.

“We’ve had some good years here and we’ve just kept motoring along here and we haven’t had to get overly aggressive with things. We’ve kind of picked our market niche and we’re just trying to stay working within that,” said Fedderly and that is what he recommends to other business owners. “Find that little hole and make some profit and leave the high volume.” Equating high volume with profit is something Fedderly sees as a oft made mistake and it isn’t usually the best way to go he said.

Despite being in business for so many years, Fedderly still finds the motivation to get up, go to work and feel good about that becausehe’s not finished yet. “We’ve still got a lot to do,” he said. He added that, in part, he also goes to work every day because of the dedicated people he works with and because he doesn’t want to “just slam the door and say see you later” he can feel good knowing that they will show up tomorrow and the next day as well.

 

Located at both north/south and east/west highway junctions, Red Deer is capitalizing on a great location and on their ability to be the service hub of the province – and it’s growing all the time.

Newly built Ross Street Patio, downtown Red Deer.

Newly built Ross Street Patio, downtown Red Deer.

Convenient and year round access are only two of the things that have drawn service companies to make a home in Red Deer. The city is located midway between Calgary and Edmonton, with a population of 94,000 and a trade base of 300,000, says Mayor Morris Flewwelling.

Like many other similar communities, Red Deer is in many ways, also inextricably liked with the surrounding area, which in this case includes 42 other communities as Central Alberta: Access Prosperity (the lead economic development organization for the region) Manager Gary Slipp pointed out.

“It’s interesting how Calgary, Edmonton and Red Deer have positioned themselves in the energy industry, and Red Deer has positioned itself as a service and supply hub for the industry with a lot of light manufacturing, distribution and various services migrating their way up to Fort Mcmurray,” he said. And the exchange between Red Deer area and the Peace is increasing. Numerous Peace Country businesses recently opening offices in the central Alberta corridor where they have positioned themselves to take full advantage of the accessibility to both the oil sands and to the sector’s activity in Saskatchewan.

The new downtown branch of Red Deer College - Donald School of Business.

The new downtown branch of Red Deer College - Donald School of Business.

Interest in relocation to the area is happening on a global scale as well. Slipp recently returned from the World Heavy Oil Congress in Aberdeen, Scotland where he spoke about the area. According to him, the interest is considerable. Lower business taxes, no machinery tax, no inventory tax and the generally favourable business conditions were purported to be among the reasons for the interest in relocating to Central Alberta.

“In the last ten years with the investment from foreign governments, and there’s lots of them – China, Norway, Kuwait, Korea – additional businesses have just skyrocketed,” said Slipp, and while he can’t give solid numbers, he did say that the growth is exponential. With the continued interest and available resources, the overall trend is likely to continue.

Olymel facility, Red Deer

Olymel facility, Red Deer

“The city itself is developing more and more land as new businesses come in so we’re seeing it in Red Deer and, to a smaller extent, in smaller communities as well…it’s going to continue to grow,” Slipp said. He also noted that he is confident that the Keystone Pipeline will in fact be approved and that the project will create an even stronger demand for goods and services out of Central Alberta in particular. The growth is welcome but certainly brings with it many of the same challenges that face northern resource communities.

One of the most challenging aspects of doing business in the area is the labour shortage however, Red Deer College does offer training in many of the industry related occupations and so provides some “home-grown labour” to supply the industry. “Red Deer does suffer from a labour shortage but not as much as the rest of the province,” said Slipp.

Red Deer is home not only to service companies but to a growing manufacturing sector, a strong retail and wholesale service industry, agriculture and tourism helping to ensure a diversified economy. Regardless of the kind of business, its location offers a competitive advantage.

In fact said Slipp, the TD Bank reported that Red Deer has the second largest GDP (gross domestic product) in the world.

Construction of residential homes.

Construction of residential homes.

And like many communities with a strong oil and gas presence, money is good and Flewwelling said the average household income is $105,000, and the average age is 34, with most of the population being male. The relatively high disposable income has caused issues with marital breakdown, family violence and a high level of youth suicide. Flewwelling added that 16-18 per cent of the population doesn’t share in that typical wealth, and some of the issues one might expect in poorer populations also exist.

“Four hundred soup-kitchen lunches are delivered to schools,” said Flewwelling, and acknowledged that there is a problem with homelessness as well. But, community caring is a standard there he added so that many of the problems are being dealt with through the community’s generosity creating a community that is considered to be a safe, welcoming place to live.

In addition to a strong economic base, Red Deer is blessed with abundant natural resources in the area including three resort class lakes: Sylvan, Gull and Pine. Parks and other amenities add to the list of things that have led to Red Deer being identified as one of the best places to raise kids and do business.

Good schools and a strong sports, cultural and arts ethos are also evident said Flewwelling. The city even has its own symphony for those that are interested.

Average person in male, 34 years of age (the number is slightly skewed by the city’s retirement community)

As the City prepares to celebrate its 100th anniversary next year, it will undoubtedly continue to grow and welcome businesses and people alike.

 

The 2012 Fort Nelson Expo went off with one obvious hitch. After the 70 exhibitors invested significant amounts of time and money to attend, decision makers were notably absent.

“I’m disappointed in the level of participation by the Horn River Producers Group,” said Energy Services BC Executive Director Art Jarvis. “I’ve campaigned with them for two months to get the right people here and there aren’t enough of the right people.”

Four of them were represented but not by the people that could make the connections and decisions exhibiters were hoping for.

Whether the projected flattening in the industry or the provincial energy conference taking place the following week had anything to do with that, can only be speculated upon but when asked, Jarvis said that the HRPG don’t take it as seriously as ESBC and it’s members does.

“They are still ultimately in control so when they yell we jump anyway,” he clarified. “I don’t think they feel they need to develop the types of relationships that you can at an event such as this… we’re doing our best to show the services and the personnel we can provide to get their jobs done and if the right people don’t show up, it’s all for naught.”

Moving forward, there will be some changes to how the expos have occurred recently. Beginning next year, the expo will operate on a three-year rotation between Calgary, Fort St. John and Fort Nelson, said Jarvis.

“When we’re in Calgary, it’s most economical for the producers to take an hour out of their day, come down and see what we have to display, talk to the right people and then still make it home for dinner,” said Jarvis. He also noted that they will be taking place in the spring.

Energy Services develops these expos as an opportunity to unite the service provider with the right people from the producers with an investment in that region and they are hoping these changes will facilitate that happening.

Closer to home, the nature of the service sector in Fort Nelson has expanded and is certainly supported by the community, and despite ups and downs in the industry, substantial amounts of effort have been made to provide what is necessary for continued growth.

And like the sector itself, Energy Services BC is focused on growth and would like to invite any interested companies in checking out the benefits of membership to give them a call or visit their website at www.energyservicesbc.org

 

 

Fort Nelson has become more than a workhorse of the oil and gas industry. The shale gas industry has literally put the community and its environs onto the map, and into the hearts of those who chose to call it home.

photo: Bruce Lantz

Nestled in the foothills of the majestic Northern Rockies, the town of Fort Nelson has long been a hidden gem in the geographic and economic landscape of British Columbia. Situated at Mile 300 of the historic Alaska Highway, the community once was largely forgotten except as a no-frills way station for those toiling in the oil and gas industry.

But those days are gone.

The Fort Nelson of today, now called the Northern Rockies Regional Municipality (NRRM), is a vibrant, growing, family-friendly community of 5,000 (plus another 5,000 ‘shadow population’ living in nearby camps) exhibiting the energy typical of resource-based communities and the entrepreneurial spirit common to northern climes. Recent world-class natural gas finds in the Horn River, Cordova and Liard basins, the largest in Canada, have turned international attention to the area, and local government – in 2009 it became the first regional municipality created in British Columbia – has responded with increased emphasis on infrastructure and quality of life.

Two views of the new Fort Nelson Rec Centre, a valuable and long-awaited addition to the community. (Photo: Bruce Lantz)

Recently, in fact, municipal officials signed a Memorandum of Understanding with the provincial government that likely will see significant oil and gas revenues returned to the area from provincial coffers to help eliminate costly infrastructure needs. High on the priority list might be improvements to their aging airport as well as the infrastructure needed to support a development, currently underway, of a commercial/ industrial business park on vacant Crown land – already 40 per cent sold – on the southern border of the previous Fort Nelson townsite. From there, the list of needs, many of them deemed crucial to progress, goes on.

“If only a tiny fraction of the wealth generated from the gas reserves is returned to the community by way of infrastructure investments and legacy improvements, the NRRM and its citizens, including First Nations, should receive lasting benefits ensuring a quality of life equal to communities in the BC Lower Mainland and most of Alberta,” said chief administrative officer Randy McLean.

Mayor Bill Streeper says his community is “loaded with opportunities”.

“We’re the ‘un-place’, said Mayor Bill Streeper with pride. “Unpolluted, untamed and unpopulated, with recreation right up to your front door. This land is loaded with opportunities and the community gives you the option of making your lifestyle just what you want it to be.

“And the community has one of the highest per-capita rates of millionaires in Canada. The business people are very successful in their endeavours.”

“The opportunity to participate and show what you can do, both in the workforce and in recreational activities, is what makes this area special,” agreed McLean. “With the nearest community (Fort St. John, BC) being 250 miles away, we are encouraged to be self-reliant and innovative.”

The non-aboriginal history of Fort Nelson goes back to 1805 when the Northwest Company established a fur trading post near the community’s present location. The community has had five separate locations, with the fifth being the current site.

Photo: Bruce Lantz

Since 1942 Fort Nelson has exhibited a history of modern experiences. The economy has expanded to include more than just fur trapping. It now includes guide outfitting, the forest industry, farming, transportation, tourism, and the oil and gas industry.

Map outlines how Fort Nelson is connected to major developments in the energy sector. (NRRM graphic)

But any community is only as good as its people, and the people of the NRRM are unique and individualistic, said Streeper. “These are some of the most unique individuals you could ever meet,” he said. “They express their own personalities but they can still meet at the same table.” For example, he explained, while businesses will compete, of course, many of those competitors are best friends. And when businesses run into problems, even their competitors are willing to help them.

“They’re hard working and they play hard, and they get involved in lots of things,” added Chamber of Commerce president Jeremy Cote. “Their pet projects are poured in between the cracks of home and work. They get things done.

“And they’re very welcoming. They like to bring new people into the fold.”

McLean agrees, calling the people of his community resourceful, independent and self-reliant. “Fort Nelson is a working community where good jobs are available to those who want employment,” he said. “Companies are prepared to hire and train people to work in positions that offer both good pay and job security.”

McLean said the lack of competition provides real opportunity for entrepreneurs wishing to go into business for themselves, while companies are more concerned about an employee’s willingness to work than in their qualifications. “They are prepared and willing to train people who demonstrate an interest and capability to get the job done,” he said, adding that the community has always been “relatively cosmopolitan despite, or perhaps because of,” its isolation and size. “Whether you are red, black or white, male or female, gay or straight, religious or agnostic, and young or old, you will be accepted or not for what you bring to the table, rather than how you got here.

“Opportunity for anyone here has always been much more to do with competency and has little to do with prejudices and stereotypes.”

What you can do in Fort Nelson and the Northern Rockies Regional Municipality is limited only by your imagination, says Chamber of Commerce president Jeremy Cote.

There’s an “incredible range” of opportunities for development of new skills and a great professional development environment, said Cote. “This is where people go because they don’t want to march to the drum of the status quo. There’s an incredible amount of unique variety here. You can go out on your own and live and die by your own capabilities.”

That doesn’t mean business has no issues. Cote said local service business owners face challenges such as trying to compete with national firms with huge resources in the oil and gas sector, while retailers face competition from big box stores and their online shopping offers. “Obviously we think companies and people should use local shops and services and invest in sustainability in Fort Nelson,” he said, adding that finding staff and paying wages that start well above the BC minimum wage, usually around $15-$17 per hour, are also factors.

But when work is done, McLean said, there’s no shortage of spare time activities, from theatre to hockey and curling or swimming, golf, slo-pitch and fastball, as well as camping, boating and fishing. “The Northern Rockies is the home of countless clear water mountain streams and scenery that’s second to none just sitting there, waiting to be enjoyed.”

Obviously, this community offers much to those who go there, said Cote. “Many people who haven’t been here associate Fort Nelson with just being away from their families, a place with fewer stores than they’re used to. Fort Nelson nowadays is totally separate from all that baggage. It’s a place to live where people have families and do things with their friends that are limited only by their imagination.”

Along with growth comes the inevitable change, both good and bad. McLean said that the combination of the explosive growth in the Horn River, Liard and Cordova shale gas basins coupled with the closure of Canfor’s forest operations in the community has changed many of the forestry jobs, where workers were home every day, to oil and gas jobs where they’re rotating into camps.

“It has reduced the level of volunteerism (and) it has made it more complicated for them to participate in team sports.” But, he said, the new Northern Rockies Regional Recreation Centre is a real asset to the community, not only providing a multi-sport venue but also offering a site for conventions, symposiums, even weddings and funerals. “The new Rec Centre is a community foundation building that will provide an excellent base for leisure and conference opportunities for the next 50-plus years.”

Cote said the community has always been changing and adapting as the population changes – “The status quo is that things are different here” – and now is no different, with the same changes occurring here as you see elsewhere: an emphasis on ‘green’, sustainable initiatives; an increase in facilities that includes more recreation areas, walking trails and playgrounds; online shopping; an emphasis on heath foods; and, an increase in foreign workers.

The downtown core of Fort Nelson is a blend of greenery and business activity – and a welcome waystation on the Alaska Highway for tourists and business travelers alike (Photo: Bruce Lantz)

Mayor Streeper sees the greatest change being the transition from a semi-remote, highway oil and gas town into modern times. That has created an increased emphasis on regulations such as zoning and building codes, which can be a challenge for long-time residents used to doing things their own way.

“But we’re bringing Fort Nelson into the modern times in every respect,” he said. “We’re modernizing the infrastructure at a substantiated cost and we’re preparing the community to go forward.”

 

Oil and gas is all about hiring local where possible these days and at least one local organization thinks that is as it should be

Let’s face it – everyone’s in business to make money and the service sector is no exception. With billions of dollars on the line, competition can bring that into sharp focus and the things that work to draw the right kind of attention to a company are sought out experiences. Energy Services British Columbia (ESBC) is committed to bringing people together to make those experiences happen.

Formerly known as the Northern Society of Oilfield Contractors, the group rebranded as ESBC in 2005 to better represent the service sector throughout the entire province, and held Energy Expos in Calgary – since cancelled due to a lack of funding – , Fort St John and Fort Nelson to get their name out there and afford contractors the opportunity to connect with the people that had the work. The events, past and present, have done their job.

Photos courtesy of Energy Services BC

“For us personally, the Energy Services BC events at Fort Nelson here have allowed us to introduce our products and are a way to introduce ourselves to the area,” said Rob Cheyne, Fort Nelson office manager, Vector Geomatics. “We just opened an office here two years ago and no one knew where to find us, no one knew what we did and it was through those venues that we were able to showcase our product, meet with people, and it awarded us two new contracts so the events nurture those opportunities.”

Events are not all they do. Calling themselves the “voice of the BC oil and gas service sector”, they advocate for their membership by working with producers, government and other interested stakeholders to ensure that the issues relevant to the membership are heard.

Energy Services British Columbia (ERBC), a member-based non-profit organization, has several stated objectives:

  • Advocate on policy and regulatory matters on behalf of our membership base
  • Market the capacity of the BC service sector as a whole
  • Facilitate capacity development within the membership base
  • Promote partnerships, networking and information sharing among members and facilitate strategic alliances with external organizations
  • Be well funded, well staffed, and well organized

Perhaps the predominant issue facing the organization throughout its existence has been that of the competition between Alberta and British Columbia Companies. “We are close to the Alberta border and we see a number of Alberta companies coming through here and they do a lot of the work that we could be doing… so we’re lobbying the oil companies, we’re lobbying government…to support us and give us the opportunity to get on these projects and the word has gone out there and things are going very well,” said Turchansky.

“We try to identify who local companies are and, by doing that, we get lists out, sending them to the oil companies… there are several working in the area and are onboard supporting local,” said Turchansky. With the 60 or 70 producers he estimates are working in the area that could amount to a lot of work.

The BC Based Business Certificate ensures that all criteria as defined by ESBC (available on their website www. energyservicesbc.org) have been met so that those companies with hire local programs can easily identify those who “have operations centres in BC and are supporting the BC economy”.

Once qualified, they are given a certificate and the company name is added to the BC Based Business directory on the ESBC website. Both ERBC member and non-member companies can apply for qualification.

One of the newer challenges ERBC is facing are the governmental changes in BC.

“Of course with the shake up in the government here two years ago, we lost all support. We’re starting to get some support from past MLAs but we don’t get any support from our local MLA – or some very limited assistance. Now we’re basically doing a lot of the stuff on our own; dealing with a lot of the oil companies that are working in the area here as well as we have meetings with CAPP.

Whether the issues are new or ongoing, ESBC strives to benefit members where it matters.

“I find no other organization that satisfies everyone as far as providing something tangible that is of benefit,” said Cheyne.