Imperial Oil and Norman Wells: A love-hate story
Imperial Oil’s decision last week to seek a buyer for its share of the Norman Wells oil field in the Northwest Territories hardly came as a shock to residents of the town of 727 people.
“The canary in the mine shop has pretty well chirped itself out,” said Nathan Watson, the mayor of Norman Wells, citing years of declining production.
But the oil giant’s potential exit from the community still raises a host of questions about everything from the town’s power supply to who will clean up the decades-old operation.
Here are some of those questions and what we can tell you so far.
How many people does the field employ?
Around 60 direct employees and another 50 contract workers, the “vast majority” of whom are residents of Norman Wells, according to the company.
But that local quotient doesn’t sound right to Kevin Diebold, the president of local contractor Whiponic Wellputer and a longtime member of the Norman Wells Chamber of Commerce.
By his account, other than the direct Imperial Oil employees living in company housing, “all the other people are either flown in and flown out, and they stay in the camp here. They have been for years and still are today.”
Diebold says the number of local contractors employed by Imperial Oil’s main contractors declined long ago.
“At first when I was here, it was a large portion that was local contractors,” he said. “And they got away from that in the mid-80s. It started to become more southern-based, and in the ’90s even more so.”
How many more years of production does the field have left?
Imperial Oil isn’t exactly keen to advertise that number, saying it considers the information “proprietary.” Or perhaps it’s wary of managing the expectations of locals.
But according to statements shared by the company with the Town of Norman Wells and other local groups last week — statements containing more information than last week’s brief press release about the marketing effort — the field’s remaining life span amounts to about five to 10 years. That squares with the new 10-year water licence the company requested and received in 2015.
What happens if Imperial Oil can’t find a serious buyer?
“With any asset that we might put out for marketing, if we don’t receive a competitive offer, then we generally continue to own and operate the site for the remainder of its economic life,” says Lisa Schmidt, a spokeswoman for the company.
So is the field still economic?
According to the federal government, very much so.
The federal Minister of Public Works and Services reports every year on the money generated by the federal government’s one-third share in the field.
Between 2010 and 2014, that profit averaged $93 million:
- 2010: $102 million
- 2011: $97 million
- 2012: $109 million
- 2013: $83 million
- 2014: $75 million
Who else stands to profit from the continued operation of the field?
The Northwest Territories government, for one.
In 2014, in its devolution deal with the federal government, the territorial government assumed control of a five per cent gross royalty on Imperial’s two-thirds share in the field.
So if the federal government is reporting a profit, it stands to reason Imperial Oil is posting one, too, which means there’s a royalty for the territorial government to collect.
What happens to the town’s power if Imperial Oil leaves?
Imperial Oil supplies diesel fuel to the Northwest Territories Power Corporation, which uses it to power the town’s generators.
Mayor Watson says the town hasn’t talked to the company about that yet, though a meeting is set for next week.
Schmidt says that while Imperial Oil would expect a buyer to “consider” prolonging that power arrangement, “I don’t think I could say that is something we would say as a requirement. We’re very early in the process.”
The future cleanup of the field — what’s happening with that?
Imperial Oil is still responsible for that, unless it manages to sell its share, in which case the new owner is responsible.
Imperial Oil filed the first ever plan for closing and remediating the site with the Sahtu Land and Water Board earlier this year.
It calls for, among other things, a new site feature that would definitely dominate people’s view as they fly over the community: a large facility, 10 hectares big, with enough room to contain 720,000 cubic metres of material.
The facility, capped with grass, would contain impacted soils removed from the ground that the company believes can’t be treated, plus debris from the buildings Imperial Oil tears down.
As for those six man-made islands of sand facing the town along the Mackenzie River: one scenario proposed by Imperial Oil would see the sand naturally returned to the riverbed through erosion.
You can read a plain language summary of the plan here.
Is there a security deposit in place to cover the cost of that cleanup?
There should be, but CBC News could not verify that there actually is.
The Sahtu Land and Water Board ordered Imperial Oil to post a security of $178 million last year, but it’s the federal department of Indigenous and Northern Affairs Canada that’s charged with holding the security.
CBC News contacted the department on Tuesday to verify that the security is in hand, and in what form.
As of early Friday, the department was still preparing its response.
Would Imperial Oil leave a positive legacy behind in Norman Wells?
Not in the eyes of the Sahtu Secreriat Inc., to judge by comments made by chairperson Ethel Blondin-Andrew during a public hearing two years ago.
“We don’t have anything to show for Imperial Oil having been here 80 years,” she said.
“Show me the library. Show me the art centre. Show me the traditional knowledge centre for Sahtu. Show me the swimming pool for the kids.”
(Note: In December 2015, the company donated $50,000 to promote literacy throughout schools in the Sahtu region.)
Despite its age, the field hasn’t produced a stable of experienced northern workers, added Blondin-Andrew.
Diebold, of Whiponic Wellputer, says a new company would mean a fresh slate.
“I could be wrong; it all depends who buys it. I’m just thinking that they would take a look at it seriously and say, OK, it would likely be better to have a local contractor that they can depend on and not have somebody where you fly ’em in here.”