Fuel solution has Inuvik residents struggling to pay bills

With its last local natural gas well drying up, Inuvik Gas is using synthetic natural gas to make up for missing fuel. But that's driven the cost up by 83 per cent, and residents are struggling.
Andre Oulette heads into one of his seven townhouses in Inuvik. With fuel costs up 83 per cent from last year, Oulette he can no longer afford to maintain or repair his units.

Andre Oulette owns seven townhouses in Inuvik, but he says the high cost of living is driving tenants out.

"Two tenants left last September, it's too expensive to live here. It's really hard for the people,” he says.

Oulette says he’s almost ready to sell up and leave town too, even if he has to sell his property at a loss.

"I'm completely screwed up with my budget. I can't fix my buildings any more.”

Oulette says he’s now paying about $72,000 a year to heat his townhouses — more than $10,000 per unit per year.

"The landlord business here was affordable before, I survived. But now it costs me money every month, because the gas prices are really extreme," he says. 

The increase, up about $30,000 from the previous year, is thanks to an 83 per cent increase in the cost of heating fuel in 2013

That's when Inuvik was forced to make an unexpected switch from local natural gas to synthetic natural gas. 

Residents are now paying $35.34/gigajoule of energy. 

Inuvik a ‘unique situation’

The general manager of Inuvik Gas says the town is in a “unique situation.”

Since about 1999, Inuvik has relied on two nearby natural gas wells to heat homes and business, and to power cooking appliances, hot water heaters and dryers.

In recent years, one of those well became contaminated with water, and gas reserves in the remaining well are dwindling.

That prompted the town to come up with an emergency back-up plan.

In late 2012, they decided to begin trucking in synthetic natural gas, or SNG.

“We take liquid propane, vaporize it, mix it with air, and use it for heating,” MacKay says.

Originally a back-up plan, the SNG solution is now the primary heating source.  

MacKay says the solution works because it doesn’t require any change to the heating infrastructure to homes in the community.

And if for some reason, the supply of trucked SNG from Alberta or B.C. is interrupted, Inuvik can easily revert temporarily to the limited supply of local natural gas.

But people in Inuvik are having a hard time swallowing the price.

“I know it’s disappointing for everybody that we have to pay the rate,” MacKay says.

“The big cost is the energy and the cost of getting it here. If we didn’t have to truck it in, it’d be a lot different.”

Synthetic natural gas is supposed to be a temporary solution to the town’s energy problem, but it’s not clear what will come next.

“The idea was to bridge us to a longer term solution, and the long term solution just hasn’t materialized yet,” MacKay says.

“We think we’ll be able to get through this heating season and the next. Then we’re working on a plan B.”

New fees, same old gas?

While Inuvik Gas is pleased the system allows them to switch back and forth between synthetic and natural gas, many customers dislike the idea of paying the new, higher rate, even when the system is running on the same old product.

MacKay says they factored that into a unified price, approved by the Public Utilities Board, which reflects the fact that the fuel source will change.

Inuvik Gas estimated they would 75 per cent SNG and 25 per cent natural gas in an average year. So far, he says, they’ve actually relied on about 85 per cent SNG.  

Synthetic gas damaging appliances?

People in Inuvik have also complained that the synthetic natural gas is damaging appliances.

"More wear and tear on your boiler, more wear and tear on your burner and (they) don't do nothing about that," says Oulette. 

MacKay disputes this. He says Inuvik Gas went to all gas-fired appliances in the town last year and found no indication that the synthetic gas was doing any damage.

He says the issues were related to maintenance and age.

“You have to imagine that the appliances in town, in Inuvik, in the North, work pretty hard throughout the year,” he says. “We couldn’t find any evidence of SNG affecting appliances.”


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