Housing, etc. in Fort McMurrayCopied from another board, thanks Tomcatino716
Oil sands boom puts companies over a barrel
Fort McMurray overheatedBy PATRICK BRETHOUR
Wednesday, January 18, 2006 Page B1
With files from Reuters News Agency
CALGARY -- Even though it's the middle of January, the northern Alberta town of Fort McMurray is overheating as the unprecedented oil sands boom exerts an ever-increasing economic strain.
Yesterday, Canadian Natural Resources Ltd. said it may have to spend up to $100-million for staff who cannot find homes in Fort McMurray, where housing prices rival those of the priciest neighbourhoods in Canada.
And Total SA's Canadian arm said it is considering building a $5-billion upgrader in the Edmonton area, rather than the more isolated and expensive Fort McMurray region, even though a facility near the Alberta capital would be hundreds of kilometres from its recently acquired oil sands project.
Synenco Energy Inc., a smaller oil sands company, has said it too might build an upgrader near Edmonton.
And one big player, Imperial Oil Ltd., warned last month that rising construction costs in the Fort McMurray area are leaving refining operations dangerously exposed to any decline in commodity prices.
"There's a lot of people with a lot of big plans," said Tim Hearn, Imperial's chairman, president and chief executive officer.
"If our upgrading in this province is not competitive, there's going to be lot of pain in this province."
But Canadian Natural is one of the first companies to spell out the consequences in detail.
Housing in Fort McMurray has not expanded quickly enough to match the frenzied pace of oil sands development surrounding the northern city, creating headaches for Canadian Natural as it works to complete its $10.6-billion Horizon venture.
"If we don't house the people in McMurray, we're going to have to fly them in and fly them out. That's part of that price. It creates inconvenience for the people and so on, so you may have to do something for their compensation," Canadian Natural vice-president Real Doucet said.
"To wait to get the housing done will definitely bring a burden to the project," he told reporters at an oil sands conference.
Mr. Doucet stressed the $100-million figure is a forecast and, as part of the contingency, would not represent a cost overrun for Horizon. The company started construction of the first $6.8-billion phase of the project last year.
"What we see is, if it takes us two to three years to put housing in Fort McMurray, we would have to take care of our employees in the meantime. So we're going to have to go into rental, subsidized rental, or put the people in the camp," he said.
Construction workers at the development, located north of Fort McMurray, are housed at the site's work camp. Many are flown in from Calgary and Edmonton for their shifts.
At issue are the employees who will operate the plant after it starts up. The first phase is slated to start producing 110,000 barrels a day of synthetic crude in 2008. That will increase to 232,000 by 2012.
When all three phases are in operation, the plant will employ 2,400 people.
An estimated $100-billion of oil sands projects are now either under way or on the drawing board in the region, putting huge strains on housing and public services in Fort McMurray, whose population has grown by 70 per cent in the past decade to more than 60,000.
In its planning for Horizon, Canadian Natural had expected the Alberta government to release more land in Fort McMurray for residential development by now, Mr. Doucet said.