CALGARY — The first Regional Municipality of Wood Buffalo council meeting since the fire that incinerated parts of its primary centre, Fort McMurray, and Canada’s oilsands was as emotional as you might expect: some councillors hugged each other, others teared up while describing the devastation they left behind, and some got frustrated with their inability to kick-start the rebuilding effort.
That the meeting was held in Edmonton only emphasized the fears and impatience of its displaced residents. “Don’t let the fire win,” said councillor Tyran Ault, urging the rest of council to keep the fun in the northern oil centre by maintaining funding for programs such as the Canada Day parade and leisure centre services so residents would have incentives to return.
Twelve days after the fire forced the evacuation of 94,000 people, shut down half the region’s oil production and destroyed 2,400 homes and businesses, Fort McMurray remains under a state of emergency while services such as water and power are restored.
‘Fort McMurray will get rebuilt’: Oil services companies start work on resurrecting oilsands hubOilsands around Fort McMurray to fly workers in and out of sites to get operations restarted quickly
Nevertheless, attention is now turning to reconstruction, and many are calling for a quick rebuilding effort in the midst of widespread concern that some residents won’t return to what was once Canada’s economic engine.
It could be the costliest rebuild ever undertaken in Canada. In a report Friday, ratings agency Standard & Poor’s said “this event has the potential to be the costliest catastrophic event for the property and casualty insurance sector in Canadian history.” It could even strain smaller insurance companies with large exposure to Alberta.
It took half a century for Fort McMurray to turn itself from a northern outpost into the country’s most productive community, one with high-quality amenities, attractions — including its first-ever Canadian Football League match last year — and housing to attract a permanent workforce.
More recently, however, the community has been struggling as oil’s price decline persists. Local unemployment was at nearly 10 per cent after oilsands companies axed investment in new projects and fired staff.
Now with these wildfires we are projecting no growth during the quarter
But it took the shock of shutting down one million barrels of oil a day due to the fire to bring attention to the area’s contribution to Canada’s economy.
“Growth during May and into June will be much, much weaker than we expected,” said Michael Dolega, senior economist at TD Economics. “We were expecting about 1.3-per-cent growth, now with these wildfires we are projecting no growth during the quarter.”
The dramatic effect on national GDP, the overwhelming outpouring of support from people across the country, the immediate response from all levels of governments, the oil and gas industry’s generous contribution to a safe evacuation and the Aboriginal groups’ embrace of those fleeing the flames all highlight how much the region means to the rest of the country.
RBC Economics data show the oilsands currently account for 2.3 per cent of Canada’s GDP, down from five per cent in 2012 when the industry was still growing and oil prices were higher.
Oilsands production shutdowns peaked at just 1.4 million barrels a day this week, representing 54 per cent of production, estimates RBC Capital Markets. That added up to a loss of $70 million a day while companies were scrambling to contain the crisis and spending their own money to fly evacuees out of the region.
Without their quick and all-hands-on-deck response, the disaster could have been much worse and only inflame the relentless global campaign against Fort McMurray’s reputation.
Maligned for being the hub of the oilsands, the fire has revealed a side of Fort McMurray few outsiders would have known: It’s a community of recent immigrants, Canadians from every corner of the country, young families with children, and young men who moved in search of a better life.
The response to the fire has been universally praised. There were no oil spills and no industry-related incidents, despite the large volume of pipelines, storage tanks and oil trains in the area.
Jim Ellis, chief executive of the Alberta Energy Regulator, said the sector’s preoccupation with safety enabled a well-executed response. “This is a classic example of all Albertans stepping up and helping out,” he said. “It was done very well.”
The oilsands’ contribution to GDP is almost as large as that of the national manufacturing sector. That contribution is a source of pride for many in the Fort McMurray area, despite the campaign to keep the oilsands in the ground and accelerate the transition to renewable energy.
“When Fort McMurray, in one month alone, shifts GDP by one per cent, just by what has taken place, that shows how far we punch above our weight and how significant we are to the Canadian economy,” said Brian Jean, leader of Alberta’s opposition Wildrose party and a long-time Fort McMurray resident who lost his home in the fire, as did many in his immediate family.
Jean worries about the long-term psychological impact of the disaster, which he said is going to be the toughest part to overcome. But he also believes the community’s opportunities are hard to match. There is no other place in the country where people with a high school education can earn $175,000 to $225,000 a year, enjoy an outdoor lifestyle and use their earnings to see the world.
But based on the experiences of other disaster-stricken communities, and because Fort McMurray’s high-paying jobs have been harder to come by in the past two years, many evacuated residents aren’t likely to return.
After the devastating fire in Slave Lake, Alta., in 2011, between five and 10 per cent of the population didn’t return. Those were primarily people nearing retirement age or single people with fewer attachments to the community, said Mayor Tyler Warman.
Slave Lake was very quickly reconstructed to provide incentive for people to come back. People were evacuated on May 15 and the first house was rebuilt and ready to move in by the middle of August, Warman said.
Charles Iggulden, president of the Fort McMurray Construction Association, said his group is mobilizing the 200 companies that make up its membership, which together employ about 10,000 people, in a coordinated effort to get back to work. He estimates the rebuild will take a year or two.
“We are pushing to get some of the smaller projects going, and the cleanup,” he said. “The biggest thing is that as people start rebuilding their lives, that they get back to work so they come back to Fort McMurray.”
Iggulden said Fort McMurray’s construction industry was working at half capacity because of the downturn. But it’s ready to step up immediately, and is pushing to get the work associated with the reconstruction. The association sent letters to the Alberta government this week seeking bridge financing to get construction going.
Russell Dauk, vice-president, land and commercial, at the Rohit Group of Companies, said the time is right to get started because companies such as his have access to people and equipment that have not been put to work in the past 15 months.
“It sounds horrible to talk about positives with what’s happened in the community, but we have two seasons in this country: it’s construction season and winter,” he said. “This happened right at the beginning of our construction season, so there’s an ability to get in here and start working on some of these subdivisions in the best time of our season for construction. We should be very thankful that this didn’t happen in the fall.”
During the council meeting in Edmonton, many expressed concern that outsiders would take the work even though Fort McMurray has been struggling with high unemployment.
“It hurts me to see equipment coming up Highway 63, when we have yards of equipment sitting idle,” in Fort McMurray, said councillor Sheldon Germain.
The biggest thing is that as people start rebuilding their lives, that they get back to work so they come back to Fort McMurray
There’s no doubt that the reconstruction effort could give the region an economic lift.
“If everything does bounce back as planned and some of the reconstruction efforts begin to start during the third quarter, that’s when you will really see a fair bit of that rebound,” said TD’s Dolega. “If oil production comes back online and there is some help from the construction sector, we do see a quarter that’s close to three per cent (growth) however, the second quarter is basically a writeoff.”
It may surprise many outside the region who only see Aboriginal communities opposing pipeline projects, but they are also big providers of services to the oilsands industry and they support a quick rebuild.
The Canadian Council for Aboriginal Business met in Calgary this week and raised $100,000 “to ensure that the families and workers of Fort McMurray are able to once more have a bustling, thriving community.”
The Fort McKay First Nation, located 54 kilometres north of Fort McMurray, hosted thousands of evacuees and many firefighters and wants the oilsands sector to prosper.
“From a Fort McKay perspective, definitely they want to see business back, the (oil) companies back and healthy, because if they are busy and healthy, so are the Fort McKay businesses,” said Barrie Robb, the nation’s chief executive of business development.
Getting permission to let residents move back into their homes will be key to re-establishing something close to normalcy, and some are already trying to find a silver lining to the disaster prior to that decision.
“We’ve had such negative press on our beautiful town, and it’s been so hurtful to all of us up there,” said Steve Auty, a retired Syncrude worker and 40-year Fort McMurray resident who fled the fire with his family and two dogs and is patiently staying with friends. “And now we are getting so much positive (feedback), free hair cuts, restaurant discounts, lots of support and that’s all wonderful.”
Though there is still no set date for when residents will be allowed back to their homes, councillors have agreed to meet once a week, in Edmonton for the meantime, to plan out the community’s re-entry and renewal.
Councillors are aware that thousands of people such as Auty may run out of patience soon. “Are we going to be taking too long with all of this?” councillor Ault asked this week. “People are going to start getting angry soon.”