The proposal for a 20-year supply of land — enough to stabilize sky-high housing prices, enough to handle an expected 200,000 people — was a key issue for Mayor Melissa Blake and the struggling boomtown.
The agreement, signed Aug. 29, 2011, put about 40,000 hectares of bitumen-rich land off-limits to oilsands companies. That set the stage for a classic Alberta battle with Fort McMurray - its growth pressures so long ignored by the province - on one side and 11 oil companies with bitumen reserves suddenly put on hold on the other, with the provincial government trying to set the final boundaries and keep an eye on royalties.
And there’s a key Edmonton-area connection.
Value Creation Inc. holds the oilsands lease to more than half the land currently inside the proposed urban boundary — more than two billion barrels of bitumen, it estimates. That’s the same company that owns the partially built Heartland upgrader near Fort Saskatchewan.
VCI would like to get that upgrader completed soon to help get Alberta bitumen to market. But to do so, the company needs access to its bitumen reserves, now frozen in the proposed new urban zone, CEO Columba Yeung said from his Calgary office.
“I am looking for a win-win-win — for the city, VCI and the province” said Yeung, the engineer who built Shell’s Scotford combined upgrader and refinery in the 1980s and now has developed new technology to make Sag-D (steam assisted gravity drainage) more efficient.
Yeung, who bought the leases near Fort McMurray in 2001, wants to remove the bitumen and return the reclaimed land to the city complete with roads and sidewalks. And he’ll use his new technology for Sag-D, which he says has much reduced greenhouse gas emissions.
The city of Fort McMurray, plagued for years by a land shortage that has sent housing costs sky high, has been waiting years for the access to land for expansion that other city’s take for granted.
With bitumen everywhere in the region, including under houses within the current city limits, it’s almost impossible to avoid the resource, said Mike Allen, a Fort McMurray MLA who was on city council the day Stelmach announced the land bank.
It’s time to make a choice, to leave some land free of drilling and Sag-D pipes and make room for the growing workforce flocking to the city, he said.
“It’s critical to stabilize housing, to get more retail space to serve people and to turn the city into a place people want to stay,” said Allen, who’d like to see the final boundaries resolved “sooner rather than later.”
“If we get this right, it will benefit the whole province, because Fort McMurray as a big work camp is not good for the province.”
Mike Evans, the city’s director of stakeholder relations, said the oil industry plans to more than double output of bitumen, from today’s 1.8 million barrels a day to five million. And that means thousands more people coming to the area.
“We have to make a choice — some land for the city and the rest for the oilsands,” he said. “If we want these plants to operate for 50 to 100 years, they have to have a permanent workforce.”
In Strathcona County, Mayor Linda Osinchuk takes a somewhat different view.
While sympathetic to Fort McMurray’s housing problems, Osinchuk said getting VCI’s BA upgrader (also called the Heartland upgrader) running is crucial to an industry plagued by low bitumen prices. Upgrading bitumen to synthetic crude would be a big benefit to the economy.
“I compliment Mayor Melissa on getting the land bank, as they had no land,” said Osinchuk.
But Fort McMurray needs to find a way to work things out with VCI. “The dialogue needs to move forward,” said Osinchuk.
The city of Fort McMurray, however, does not want to see oilsands extraction within the urban sub-region, said Allan. “That’s a key point the mayor is focusing on.”
Conflicts are easy to find in bitumen country. For instance, plans for a small upgrader near the city’s airport are contentious.
“There are all sorts of reasons why you don’t want that development next to the airport,” said Evans.
So far, all the companies are working “collaboratively,” said Allan. “They want to make sure the municipality is successful as well.”
But Yeung said he’d like to see more collaboration with the city for his proposals for a staged timetable for extracting the bitumen “where houses won’t be built for years.”
“Normally, it takes 12 years to get all the bitumen out of an area and restore the land, but that can be shortened to 10 years,” with the new technology, said Yeung.
Meanwhile, VCI is stuck. It applied for approval to drill some exploratory wells to outline the exact locations of the bitumen, said Yeung, information that is crucial to the plan to work with the municipality of Wood Buffalo.
But Alberta Environment and Sustaintable Resource Development has said no permits will be considered until the final boundaries are sorted out, said Nikki Booth, department spokesman.
Alberta Energy, now responsible for the proposed urban zone, is keeping a low profile. The department kicked off consultations with oil companies in September. It also held a two-day consultation in Fort McMurray in November.
It’s too soon to say whether the province will buy out the leases of some of the oilsands companies, said department spokesperson Bob McManus. “That’s just speculation at this time.
McManus also could not say whether the province would allow oilsands companies to extract bitumen inside the urban sub-region boundary. The final plan will likely go to government for approval this summer.
Meanwhile, a long time Conservative and former energy minister Rick Orman has come to VCI’s assistance. Orman, who runs a Calgary oil company, also ran for the leadership against Premier Alison Redford.
“I took this on because I think VCI has been treated unfairly by the Crown,” Orman told the Journal.
VIC land has been frozen “without notice” and the company’s lease on the bitumen is “inextricably tied” to the fate of the Heartland upgrader, he said.
Getting the BA upgrader on track “fits perfectly with the province’s economic strategy — including a Canadian energy strategy, the goal to do more upgrading here and meet budget challenges,” Orman said.
Both Orman and Yeung can’t see that Fort McMurray will ever need all that land. There’s plenty of room to work out a solution, they say.
“It’s hard to imagine Fort McMurray will be 154 square miles, about two-thirds the size of Calgary,” said Yeung.
But the city figures only about half the 40,000 hectares in the proposed urban sub-region is suitable for housing and new subdivions, said Evans. About one-third of the land is too wet or steep for housing and some has to be saved for a buffer zone (possible 1.6 kilometres) between the city and oilsands extraction operations, he said.
No one should underestimate the importance of the land bank to Fort McMurray’s future, said Allan.
“We are in a constant catch-up mode in Fort McMurray, and we are short two million square feet of commercial space. If we have the land, we can attract people to stay.”
Original Article
Source: calgaryherald.com
Author: Sheila Pratt
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