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Why Fort McMurray will never be the same

One year after the wildfire, Fort McMurray faces slow growth, unemployment and residents with itchy feet. The boom years never looked so good.


 
Nathan Lake in Fort McMurray, Alberta on Tuesday, April 4, 2017. (Photograph by Amber Bracken)

Nathan Lake in Fort McMurray, Alberta on Tuesday, April 4, 2017. (Photograph by Amber Bracken)

Nathan Lake rushed home from his oil sands site job with a half-hour to spare. He grabbed a few clothes, along with his passport, laptop and apprenticeship papers, and joined the mass flight from the wildfire devouring much of Fort McMurray, Alta., on a date that for locals will fuel a lifetime of stories: May 3, 2016.

Lake’s evacuation route led him 460 km southwest to a bedroom community near Edmonton and an apartment on offer from a buddy. In his month of exile, the aspiring electrician was overwhelmed by generosity from Spruce Grove residents: they hosted a barbecue for wildfire evacuees and donated clothing for Lake and others to choose from. But there was more that impressed the 21-year-old, who was living away from Fort McMurray for the first time since he was kindergarten-age back in Newfoundland.

With his month of downtime, he found plenty of attractions in nearby Edmonton—bowling alleys, go-karts, giant movie-plexes—none of which existed back home, where he says the things to do for fun were to get “s–t-faced” or get away.

Then he started looking at real estate, and what he might be able to afford when he becomes a full-fledged electrician. In Spruce Grove, he could buy a five-bedroom house with a sprawling backyard and a rental suite in the basement. “Here, for $500,000 you can get a nice trailer,” he says of Fort McMurray. Values have tumbled from their heights and may plunge still further, but home prices still carry the premium of a faded boom town.

He’s at a pub back in Fort McMurray on a sunny spring Friday, sipping a midday Coors Light after finishing the final exam for his journeyman’s certificate. Soon, Lake explains, he’ll start looking for a lifestyle increasingly on offer to mobile young people like him: work at a northern Alberta oil sands project, but live further south, either flying in and out of a camp or driving up once a week. Oil sands work, you might say, but without the fabled oil sands city.

READ MORE: Return to Fort McMurray: The long journey to a new normal

To be sure, Lake can see his hometown coming back from what was, in dollar terms, Canada’s most destructive natural disaster. The blocks of rubble and ash have given way to mud, heavy machinery and house frames—hundreds of new homes are rising in neighbourhoods destroyed by fire, including the one where he grew up. Thousands of people never returned, but the majority did. And despite continued high unemployment and uncertainty about what’s to come, many seem more committed to the town than ever.

But for others, the wrenching cycle of flight, return and reconstruction has opened their eyes to options they might otherwise have overlooked. The city had prospered through constant expansion, but the last of the megaprojects from the good ol’ days, the Fort Hills mine, was nearing completion when the flames ripped into town. Demoralized by an oil price still sputtering around half what it was just 20 months before the fire, the city now faces an unemployment rate more than double that at the height of its boom. Major global oil companies have staged their own exodus from the oil sands region, making deals to leave the projects with Canadian firms.

Some residents who were unsure about their future in the city pre-wildfire were certain about leaving afterwards. And then there’s Lake, who found thoughts of the comfortable life he found in the south difficult to shake. “It’s hard to see that there are better things if you never leave,” he says.

There are wisps of hope for another petroleum boom, but more people foresee stability and modest growth as the sunny-side scenario. The massive reconstruction is providing a jolt of adrenalin, but that’s going to wear off. All of which raises a serious question that the task of recovery had put on hold. Fort McMurray is rebuilding, but into what?

An empty lot in Fort McMurray, Alberta on Tuesday, April 4, 2017. (Photograph by Amber Bracken)

An empty lot in Fort McMurray, Alberta on Tuesday, April 4, 2017. (Photograph by Amber Bracken)

THE FIRE WAS, in some ways, a dramatic interruption to a narrative already being written. Fort McMurray is shifting from a boom town to a plant town, real estate exuberance has cooled, any growth that occurs is sedate, and the industrial bosses headquartered elsewhere squeeze more out of less to meet investor demands. There’s still a supply of good-paying jobs for young people. But many of them are filled by visiting labourers who come up weekly, staying in on-site camps. The companies call them “fly-in, fly-out” staff. In the process, Fort McMurray increasingly becomes a fly-over community.

Melissa Blake has been mayor of this region, named Wood Buffalo, since 2004—she’s led through a decade of overwhelming growth, then overwhelming decline that began in 2014, followed by the disaster and the early stages of reconstruction. She won’t run in October’s election, but knows the challenges facing her successor in an era of slower growth will be just as great. “We need to make sure that people are able to remain here,” Blake says, because reduced wages, overextended mortgages and burdensome taxes would hamper “their ability to put food on the table.”

READ MORE: The two cruel casualties of the Fort McMurray fire

In the glory days of 2013, Alberta’s finance ministry forecast that the Wood Buffalo region’s population would this year blow past 100,000, reaching 132,730 by 2041. Last June, an update projected the region to stay below a six-figure population through 2041; it would come out of a mild shrinkage period later this decade and proceed growing modestly, though below the province-wide average—a highly unusual posture for Fort McMurray. The higher growth scenario was never a forecast for stability, Blake says. The revised outlook seems more sustainable, and reminds the mayor of her early years in the city, between the oil-price doldrums of the early 1980s and the oil sands mine-expansion boom that began in the 1990s.

But those figures don’t capture the wildfire’s impact. While 88,000 people evacuated the city, authorities estimate only about 73,000 returned, suggesting a loss of one-sixth of the population. Locals wonder if the decline is even greater, given how empty restaurants and stores seem to be much of the time.

Firefighters saved most of the town, but flames levelled 2,400 homes—entire chunks of some neighbourhoods. The charred rubble, demolition and winter freeze have given way to mud and construction equipment, with as many as 700 homes expected to be rebuilt this year. But in amongst the spring mix of signs for excavation firms and home builders, there are many for-sale signs—homeowners who took their insurance payouts for houses and are now selling the vacant lots. “I think the wildfire was the last step out the door for a lot of people who were already on the fence,” says real estate agent Caitlin McQuilter.

WATCH: What they carried away from Fort McMurray

At the end of a cul-de-sac in Abasand, across from where a playground once stood, is a “for sale by owner” sign with Eugene Lake’s number scrawled on it. No bites thus far as he tries to sell for $220,000, far below where the city last appraised his land. “And now I’ve got a nice view there,” he jokes darkly. The land used to back right onto the forest. Much of that forest is gone.

Eugene Lake is Nathan’s father. For three months after the wildfire, he was flying back and forth to Shell’s Albian Sands project as a heavy equipment trainer. When the company offered buyouts as part of its downsizing efforts, Eugene took the package, along with the insurance payout for his burned-down home. He and his wife are now in the middle of moving back to Newfoundland’s west coast, for retirement at age 54. “I had enough of Fort McMurray a couple years ago,” he says. “And then the downturn—people are just not happy like they used to be.”

The fire accelerated his retirement plans, but he says a lot of younger colleagues are getting out if they can as well, for fear of wage cuts or leaner and more demanding workplaces down the road. Abdi Adam still has his job as a contract carpenter at one of the older mines, but his pay rate is down. “For the ones who are already working now, it’s just ‘Hold onto it,’ ” he says. Unemployment in the region sat at 9.1 per cent in February, about where it was a year earlier. Adam’s wife is among those looking, having lost her grocery job in a city with fewer supermarket customers. Many unemployed tradespeople Adam knows are seeking gigs doing home reconstruction.

New home building had withered in the recession, and companies were downsizing or finding work elsewhere in Alberta. The hundreds of new homes expected to emerge from the ash-coated earth this year—and the next year, and the next—are equal to the rate of boom-time construction activity in Fort McMurray. “You obviously hate to say that, because there are other ways that you’d rather get your work, but it was a backhanded blessing to the construction industry,” says Keith Plowman, who runs a landscaping company and is vice-president of the Fort McMurray Construction Association. The Conference Board of Canada estimates the home replacement adds 0.4 per cent to Alberta’s GDP growth; without it, the provincial government would lose its boast about best-in-Canada economic performance.

READ MORE: Understanding a city of dreams

Out-of-town builders have rushed north to meet demand. “I don’t know what the word is for it—mass chaos sometimes comes to mind,” Carson Golly of Edmonton-based Bavaria Homes says of the scene of multiple companies working side-by-side. Local leaders at first expected to need a trailer camp to accommodate all the visiting framers and roofers, but there’s ample rental availability, even with the hundreds of families renting while their homes get rebuilt. Apartment vacancies were at 17.8 per cent last October compared with 29.4 per cent a year earlier, according to the Canada Mortgage and Housing Corporation. It will tighten further as building season picks up, possibly erasing recent rent reductions that had allowed lower-paid McMurrayites to finally leave subsidized housing, or to live without roommates.

Industry professionals predicted the burn zones would feature more vacant lots for sale than the 88 listed as of February. But many wildfire victims are unable to walk away from their properties. Overextended on their mortgages and beset by depressed home values, they didn’t make enough from their insurance payouts to cover their debts. Other owners getting insurance-covered rebuilds have already listed their unfinished homes, while construction firms are scooping up vacant lots in cut-rate cash deals. Once the reconstruction ends later this decade and the workers leave, there could be a bigger glut of unoccupied homes. “If oil doesn’t pick up and if some of the big projects don’t pick up, then it could end up being a false economy, where we’re rebuilding houses so people can sell them,” Plowman says. “Or not sell them.”

At the north edge of town, the oil collapse put a hard brake on new homes in Parsons Creek, a suburban development for 24,000 new residents that was about one-tenth built when petroleum prices took a dive. A new public school commissioned to handle more rapid growth will open in September. But it might not reach capacity for five years or longer, says board superintendent Doug Nicholls. “Overbuilt” is not a term that’s been associated with Fort McMurray in decades.

That said, families with children seem more determined to return than others; while the post-wildfire population dropped about 17 per cent, public school enrolment fell only by about five per cent this year. The board will reopen its Beacon Hill school, which was untouched by flames but damaged by smoke. This is a key step in restoring the community, trustees told the parents and staff gathered for the board decision.

Not returning was never a question for Selena Klapp, who grew up attending Beacon Hill. Her three kids have gone there and she now works at the school as a librarian. Losing her home made 2016 her hardest year. But she’s managed by taking things day by day, and the swirling economy currents don’t faze her. “I have watched Fort McMurray change for 32 years,” Klapp says, “and the nature of a town so dependent on one resource. It will always evolve. It will always be changing.”

Selena Klapp, right, with her son Lane Klapp, 7, in Fort McMurray, Alberta on Wednesday, April 5, 2017. (Photograph by Amber Bracken)

Selena Klapp, right, with her son Lane Klapp, 7, in Fort McMurray, Alberta on Wednesday, April 5, 2017. (Photograph by Amber Bracken)

FROM THE 1970s until the start of this century, Fort McMurray was a two-mine town. People worked at Syncrude or Suncor, scooping up bitumen and processing it into synthetic crude. Canadian and global petroleum companies have since spread mines and deep-drilling projects across northern Alberta’s gargantuan reserve—oil sands production has nearly quadrupled since 2000 to about 2.5 million barrels per day. Another 194,000 barrels will come on stream by the end of next year, as construction of Suncor-led Fort Hills winds down and operations begin this fall. But the steep tumble from $100-per-barrel oil has helped cut short the age of big, multi-year mine developments, forcing companies to shelve other large projects; analysts expect smaller, more modular expansion projects from here on in.

“Investors are looking for shorter turnaround on their capital,” says Ben Brunnen, vice-president of oil sands for the Canadian Association of Petroleum Producers (CAPP). Money’s shifting toward U.S. shale oil plays, as well as a formation that straddles the Alberta-B.C. boundary. As Peter Tertzakian, an influential energy economist, put it to a Vancouver audience in March: oil sands attract a third of Canadian energy capital expenditure “but 95 per cent of the attention, because we’re still fixated on yesterday’s news.”

Major international players have been voting with their feet. Statoil, Total, Shell and ConocoPhillips have all recently sold off oil sands stakes for a total of $27.3 billion in cash and shares, leaving most operations concentrated in the hands of a few large Canadian firms. Fewer big players could mean fewer dollars at play to expand oil sands. And that means fewer jobs. More oil sands production translates into a bigger long-term workforce, but the boom was in the construction fray. At the peak of the Fort Hills project, 7,000 workers were on-site. Operations, by contrast, will employ 1,400 staff and 400 contractors, down from the Suncor’s earlier forecast of 2,000 workers.

The plunge in oil prices has pushed the sector to slash workforces and drive down production costs to keep operations viable and calm investor worries. Suncor cut cash operating costs from $39 per barrel in 2011 to $23.75 last year through process, design and labour savings, and after acquiring a controlling stake in Syncrude, will push down costs there, too. This push continues, sector-wide: a December report by PetroLMI projected 49,750 overall oil sands jobs by 2020; that was down 3,345 workers from the same forecast 10 months earlier.

A construction site at the new Suncor Fort Hills tar sands mining operations near Fort McMurray, Alberta, September 17, 2014. In 1967 Suncor helped pioneer the commercial development of Canada's oil sands, one of the largest petroleum resource basins in the world. Picture taken September 17, 2014. (Todd Korol/Reuters)

The Fort Hills project, where Suncor has been cutting costs and testing automated trucks (Todd Korol/Reuters)

Suncor, meanwhile, has been testing automated heavy-haul trucks to cart bitumen around its mines. While the firm hasn’t set out a timeline to shift to driverless, replacement trucks on order can be manned or unmanned, spokeswoman Erin Rees tells Maclean’s. When that switch comes, 800 jobs will disappear at Suncor and the trend will likely spread to all mines, says Ken Smith, president of Unifor Local 707A. “I don’t know where people are going to be working,” he says. “The future gets more and more dismal for the younger people coming up.”

And increasingly, Fort McMurrayites are competing for oil sands jobs against non-McMurrayites. Commuter workers were always a reality in the region, the so-called “shadow population” of temporary labourers staying in camps. In the days of skilled-worker shortages, companies built their own airports at their sites to import workers from Edmonton and Calgary that the northern boom town couldn’t supply—plus, newer mines and plants were long drives from Fort McMurray, so building staff camps for week-long work stints made sense. Fort Hills is at the literal end of Highway 63, and the 90-minute drive from town is too daunting for anyone on a 12-hour site shift. So all staff stay in camps.

In late 2015, Fort McMurray residents reacted with fury when Suncor held hiring fairs for Fort Hills in Calgary, Edmonton and B.C.—but not the nearby recession-mired burg. The company bowed to pressure and now offers Fort McMurray-based workers three weekly shuttles to Fort Hills camps. The project’s fly-in program from Calgary, Edmonton, Vancouver and Kelowna, B.C., by comparison, offers 58 inbound planes, provided by WestJet. “It’s a horrific thing to think about,” says Don Scott, a former provincial cabinet minister and regional councillor. “There’s not a place in Canada that would accept a situation where the local community is not the source of employment.”

READ MORE: How big was the Fort McMurray fire?

Scott, the first person to declare he’s running for the mayoral vacancy this fall, says fly-in is the top issue he hears about from voters, who blame it for everything from high local unemployment to battered house prices. “The companies used to give a lot back to this community. I’m not sure what’s shifted,” he says. He hopes to persuade oil sands firms that it makes more economic sense to use the local workforce—or at least to use the city’s new airport, opened in 2014 with capacity for an expected 1.5 million annual passengers (it’s on track to handle half as many this year). But the companies have invested in their own airports at the Albian, Horizon and Fort Hills plants and seem unlikely to vacate them.

Scott is among those calling on the industry to join federal and provincial governments in talks to develop solutions to this problem—a familiar refrain when the boom brought other pressures. Maclean’s asks Blake, the current mayor, if that’s ever happened. “No. Unless you have a wildfire, and then they all show up,” she quips. Blake catches herself, slaps her left wrist in mock penance and adds: “And they bring wonderful support for a very difficult time.”

Suncor says Fort McMurray will be one of three bases, along with Calgary and Edmonton, for qualified workers for Fort Hills operations, and will keep providing bus-in services to the northern camp. “We continue to hire locally on an ongoing basis,” says Rees, the spokeswoman, in an email. Brunnen, the CAPP vice-president, points out that even if workers come from out of town, the community reaps other benefits from the plants, including property taxes paid to the regional municipality.

But even that windfall will soon be diminished. New legislation from the Notley government, in the name of equality and “industry competitiveness,” limits the gap between the highest non-residential tax rate and the lowest residential at 5:1. Wood Buffalo’s gap between oil sands industrial zones and the lowest rural home rate is 18:1, which means there’s a reckoning to come for homeowners and the municipality. One of the biggest job cuts of 2017 came at the regional government itself, which axed 168 positions; administration blamed the provincial tax reforms along with the wildfire and economic slowdown.

Further downturn and a glut of post-fire vacancies might ease home prices to a level where newly minted electrician Nathan Lake and his ilk could find life more affordable. But a declining city will lose more businesses and become a less appealing place to call home—especially if work is just a company-paid flight from a house in Edmonton. He’s not sure if he’ll say goodbye to Fort McMurray yet. But he’s readying himself to. While residents after the wildfire feel more bound and generous toward the city than they used to, they also understand Lake’s thinking, he says, and nobody’s given him grief.

His father, meanwhile, fears what will come next to the city where he prospered for so long. “There’s all this stuff about ‘Fort McMurray strong,’ and ‘we will rebuild,’ ” says Eugene over the phone as he waits for the ferry in Sydney, N.S., to take him home to Newfoundland. “I’m going to tell you something right now: that’s a long ways away, and I don’t know if people are blind or just want to say that to make it look good up front.”

 

See more: What they couldn’t leave behind


 

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