U.S. Thirst for Energy Lures Explorers, Speculators

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.”

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 U.S. 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 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, airstrips, river wharves and other permanent transportation links that would bring thousands of tractors, earthmovers, trucks and barges to a region accessible only by air, water and winter ice roads.

Although Searle says a decision on whether to build a pipeline remains years away, change in the MacKenzie Delta is already 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 continue this time or disappear again, as they did 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 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 $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.

An alternative would include a connecting arm beneath the Beaufort Sea to Alaska, but the extra construction and bureaucratic demands of dealing with U.S. and Canadian politics and regulators make the Canadian-only plan the front-runner for now.

Searle’s MacKenzie Delta Producers Group comprises four companies--Imperial Oil Ltd., Conoco Canada Resources Ltd., Shell Canada Ltd. and ExxonMobil Canada--with Cournoyea’s MacKenzie Valley Aboriginal Pipeline Corp. as a partner.

That partnership is the kind of deal envisaged by Berger in his 1977 report, considered a milestone in government-aboriginal relations. He said then that the Inuit and Indian communities needed the protection of land claims treaties and partnership agreements to deal with the irrevocable change of Arctic development.

Now, Berger said in a telephone interview, aboriginal communities “have the opportunity to have an ownership interest in the pipeline and to participate in whatever spinoffs there are.”

Although the Inuvialuit treaty gives Cournoyea’s people control over their traditional lands, she said they also needed the partnership deal with the producer group to guarantee a role in building the pipeline.

“Before, they didn’t have to deal with us,” Cournoyea said of the energy companies. “But even though there’s a [land] claim, we really have to work hard to be dealt with in a meaningful way, you know?”

Inuvik Mayor Peter Clarkson, overseeing growth expected to increase the town’s population by more than 50%, said the indigenous land rights “mean a lot more money is staying in the north now. I think that’s a big step.”

He sees the impact in Inuvik, where building permits were issued for construction worth $17.5 million last year, compared to $1.3 million in 2000.

Clarkson anticipates a similar figure for 2002, due in part to construction of territorial projects including a hospital and female youth offenders facility, along with badly needed housing. In one new subdivision, 18 of the 24 houses going up already have been sold.

“I don’t think anyone knew that the second boom was going to come with such a big impact,” Clarkson said.

The effect ripples throughout the region of roughly 14,000 square miles, which has a population of less than 10,000, the overwhelming majority aboriginal.

Staff Sgt. Mark Wharton of the Royal Canadian Mounted Police said the present Inuvik detachment of 17 officers could increase to 28 by 2006, with a new headquarters planned. “I’m having a hard time maintaining my guards and janitors because [those jobs] don’t pay as well” as jobs in the energy company camps, he said. More money also brings problems, such as the cocaine that has turned up in the last year, Wharton said.

He believes that the changes are only beginning, because while it may take years for the pipeline to be built, “eventually it will happen.”

Lucy Jackson, an interpreter for tribal elders during the Berger commission hearings three decades ago, said she worries that the aboriginal communities lack sufficient understanding of what the pipeline will mean. In any case, she believes that “the spinoff isn’t going to be that great.”

Searle, of the producers group, acknowledged that a pipeline would provide only a few hundred permanent jobs after the two- or three-year construction.

He said the main benefit for communities would be spinoff businesses, such as more exploration and services.

Back in Inuvik, Cournoyea said the pipeline is needed because aboriginal communities no longer can survive on the hunting and trapping that sustained their ancestors. Her corporation’s role is to “lock in” as many economic benefits as possible for her people.