U.S. energy demand fuels Canadian development boom

Tuesday, May 28, 2002

INUVIK, Northwest Territories -- Brian Desjardins headed up to Canada's western Arctic in 1999 to escape the pressure and hassle of urban life down south. It hasn't quite worked out that way.

Instead of hunting caribou across the frozen tundra, the tourism and fund-raising coordinator for the town of Inuvik finds himself planning conferences and dealing with newcomers lured by the region's latest energy boom.

Almost daily, people throughout North America send Desjardins e-mails asking about work and lodging in this town of 3,500 -- and growing -- at one of the northernmost points of mainland Canada, where the MacKenzie River approaches the Beaufort Sea.

The frontier environment he first encountered has become a mini-metropolis, with diesel trucks cramming MacKenzie Road and a months-long wait for housing. Desjardins, 30, laughs at the irony.

"One of the reasons I came up here was to kind of slow down, get out of the rat race," he said. "If anything, the pace has gotten faster."

Spurred by U.S. debate

The excitement comes from renewed talk about building a pipeline to transport natural gas from the MacKenzie Delta region to points south.

Increasing U.S. demand, now backed by the Bush administration's desire for North American energy sources to reduce dependency on overseas supplies, is the main catalyst for Inuvik's growth spurt.

The heated debate in the United States over a proposal to drill for oil in the Alaska National Wildlife Refuge -- recently rejected by the Senate while supported by the House -- also has invigorated the idea of pipelines to carry gas from Alaska and Canada to the lower 48 states.

Pipeline talk began three decades ago with the discovery of Arctic gas deposits, setting off an initial exploration boom in the Inuvik area. But unsettled land and economic rights of the region's indigenous peoples derailed the idea.

With that issue resolved in recent years, confidence about rising U.S. demand for energy has brought back the explorers and speculators.

"One of the primary motivating factors is the anticipated increased growth and the anticipated increased demand from the lower 48," said Hart Searle, spokesman for a consortium of energy producers studying a possible pipeline along the Northwest Territories' MacKenzie River valley. "The market makes it all go round. You've got to have confidence in the market."

A pipeline is seen by some as the railroad of Canada's north, opening the Arctic to increasing development and changing forever how its people live -- particularly the Inuit and Indians of the endless tundra. Some see that as a negative, bringing pollution and other environmental stresses. Others see it as a boon for a region facing the shift from a traditional economy of hunting and trapping to the job-based economy of the south.

A 1977 government report by Thomas Berger that opposed building the pipeline warned of roads, air strips, river wharves and other permanent transportation links that would bring thousands of tractors, earth movers, trucks and barges to a region accessible only by air, water and winter ice roads.

Change evident

While Searle says a decision on whether to build a pipeline remains years away, change in the MacKenzie Delta already is evident. More than 1,000 workers fill exploration camps dotting the frozen Beaufort Sea and delta region; the myriad ice roads dotted with signposts pointing the way to various projects even have stop signs at some intersections.

In Inuvik, construction workers are building new housing and renovating dormant camps and dwellings left over from the boom in the 1970s. Offices for companies with names like Tundra Tech and Arctic Digital have opened, and old-timers talk of new faces crowding the eateries where they get their caribou and musk ox burgers.

"The whole character of the place has changed quite significantly: A lot of people. A lot of activity. Everybody's busy. Prices have gone up," said John Nagy, an environmental researcher for the Northwest Territories government who first came north in the previous boom.

Throughout the region, the main question is whether the development and accompanying dollars will stay this time or disappear again, like when the first boom fizzled in the late '70s.

"We all talk about the things we really care about, but when you really come down to the harsh reality, the economics of the pipeline is what's going to drive it," said Nellie Cournoyea, an Inuit leader who heads the Inuvialuit Regional Corp., which controls her people's traditional lands.

Various pipeline plans exist, with two getting the most serious consideration. One would carry gas from Alaska across Canada's Yukon Territory to hook up with a broader distribution network in Alberta.

The other, at an estimated cost of more than 3 billion Canadian dollars ($1.3 billion), would follow the MacKenzie River from near the Beaufort Sea to Alberta, running for more than 780 miles through the Northwest Territories.

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