North

Layoffs in N.W.T.'s Sahtu region follow slowdown in oil exploration

The earlier promise of the Canol shale oil play in the Northwest Territories has cooled as companies in Norman Wells contemplate a second consecutive year without any exploratory drilling for shale oil.

Businesses in Norman Wells face prospect of 2nd winter with no exploration

ConocoPhillips drilled two exploratory horizontal wells near Norman Wells, N.W.T., last winter. The company did not return to the site, located south of Norman Wells, for more exploration this winter — nor does it plan to next year. (CBC)

The earlier promise of the Canol shale oil play in the Northwest Territories has cooled as companies in Norman Wells contemplate a second consecutive year without any exploratory drilling.

"Businesses are definitely experiencing the downturn and hoping that Husky and Conoco will come back," says Pascal Audet, owner of Northridge Contracting.

Last year ConocoPhillips became the first company in the Northwest Territories to pair horizontal drilling with the controversial practice of hydraulic fracturing in search of shale oil. 

But this year the company did not return to the site, located south of Norman Wells — nor does it plan to next year.

They're all gone, right down to our cleaning lady.- Todd McCauley, Norman Wells business owner, on cuts made by his company

Now, amidst still-slumping oil prices, the other player in the Canol, Husky Oil, also says it has no plans to drill next year. The company says it's focusing on projects closer to the production stage. 

A familiar scenario 

Audet says Northridge has laid off workers in response to the slowdown. While frustrating, he says the situation is nothing new for a region that previously invested in equipment in anticipation of the Mackenzie Gas Project — only to watch that project go nowhere.

A map showing the oil and gas parcels not currently being explored south of Norman Wells by ConocoPhillips (beige parcel) and Husky Oil (green parcel). (Sahtu Land and Water Board )

"We've seen this type of thing before, the market going up and down," he says. "It's a big challenge for a local contractor to survive these big market swings."

Todd McCauley, owner of Aurora Technologies, has also recently laid off workers, including technicians and an administrative staffer. His company, in partnership with Northwestel, provides remote phone and internet service to oil explorers working out of remote camps. 

"We've laid off everybody in our office except for me," says McCauley. "They're all gone, right down to our cleaning lady.

"The phone rings maybe three or four times a month, and it's usually Statistics Canada calling. There's just no traffic and it's rippling throughout the region."

While both McCauley and Audet say the Mackenzie Valley fibre optic cable is creating some work, Audet says it doesn't match the level of economic activity created by an oil and gas drilling program. 

Audet adds that the remoteness of the Sahtu region — connected to the south only during the winter, via a seasonal road — further constrains his company. 

"We're so isolated that we don't have the luxury of being able to move the equipment easily to another market to take advantage of other work."

Preparing for a potential upswing 

The seasonal winter road the Northwest Territories government does build to Norman Wells every year limits the operating window for oil and gas companies. It's also been the site of more than one accident in previous years.   

One of the two trucks carrying a mix of water, chemicals and sand used at ConocoPhillips' Canol shale exploration project that slid off the Sahtu winter road in 2014. (Roger Odgaard/Facebook)

In response, territorial government is applying to the federal government for more than $500 million in aid to help build the next section of the permanent, $700-million Mackenzie Valley highway, from Wrigley to Norman Wells.   

"Infrastructure Canada is reviewing the proposal," says Jayleen Robertson, a director with the Department of Transportation. "We expect there will be some discussions in the coming months as they review and evaluate the proposal."

Another department, Industry, Tourism and Investment, is expected to soon announce the launch of public consultation sessions on made-in-the-N.W.T. hydraulic fracturing regulations. 

ConocoPhillips' application for its 2014 fracking program did not encounter much resistance at the time. But the territory's anti-fracking movement has since become increasingly mobilized, despite the lack of companies actually moving forward with fracking plans. 

McCauley personally does not believe the anti-fracking movement speaks for most residents in his region.  

"That's the minority in the region," he says. 

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