Unconventional Oil

[johnlw]

Hutterite colony has 'hard decisions to make'

Jon Harding
Financial Post

Saturday, March 11, 2006

FORT SASKATCHEWAN, Alta. - When George Hofer looks across the highway from his home, he sees the third-largest oil company in the world.

But lately, the 64-year-old financial manager of the Scotford Hutterite colony has spent more time looking across a negotiating table at the fourth-largest oil company.

The colony, which moved from Lethbridge to farm on land 20 kilometres east of Edmonton in 1952, is the single biggest landowner within Alberta's Industrial Heartland, a rapidly expanding heavy industrial region that is fast becoming a world-scale refining and petrochemical hub.

Directly across Highway 21 is the Scotford Complex, a 24-year-old refinery, petrochemical plant and more recently an upgrader owned by Shell Canada Ltd. and its parent, Royal Dutch Shell PLC.

Six months ago, calls started arriving from various companies looking for land, including Paris-based Total SA, the fourth-largest oil company in the world behind Exxon Mobil Corp., BP PLC and Royal Dutch Shell.

Mr. Hofer is worried that the colony's row homes, school and mixed-farming operation are about to be boxed in.

"We don't want to be in a situation where we are pushing back," Mr. Hofer said. "It's the way we are. If there's no smoke, there is no fire, so to speak.

"But you look out there these days and you can see the smoke is coming. We have hard decisions to make," he adds, apprehension showing in his face, of what he thinks might lie ahead for the Hutterite community of 20 families, 85 people in all.

Mr. Hofer's anxiety is shared by a handful of others across the four municipalities that border the Heartland.

Anne Brown and her family live in a residential subdivision in Sturgeon County, near the western border of the Heartland.

She and other residents unsuccessfully took the county to court five years ago over its decision to expand its zoning for heavy industry, an act that broadened the range of the Heartland.

Now the county, which has a population of about 19,000, is again proposing to dedicate another 50 sections to heavy industry.

"We were 1.6 kilometres away and now they're proposing it run right up against the Sturgeon River, which backs onto our properties," Ms. Brown said.

"There are some strong concerns, but everything is happening so fast and people do have lives to lead.

"Are we going to challenge this in court? Right now we're trying to use the public process and nothing has been finalized," said Ms. Brown, noting she expects the first public hearing, set for March 21, will be well-attended.

Meanwhile, Jean-Luc Guizo, the president of Calgary-based Total E&P Canada Ltd., said his company has not decided where it wants to build a $9-billion upgrader, but has acquired some land in the Heartland as an insurance policy should the company ultimately decide the economics make sense to build there.

Mr. Hofer said the commonly cited going rate among residents who have had dealings with other companies is $10,000 an acre.

"Or more because demand has gone even higher," he said.

The Hutterite families are equal owners of the colony's 35 sections, or about 22,400 acres. But only five of the sections, zoned for heavy industry, would bring top dollar.

Even so, a sale would still make each of the 20 families millionaires, if they wanted -- a prospect Mr. Hofer smiles at for only a second before shaking his head.

"We need the land for grazing cattle," he said. "All the money in the world doesn't matter if you've got no place to go. We could sell high and buy more land at lower prices but we've got good relations with our neighbours -- including Shell. We don't really want to leave. But particularly during the spring and then fall harvest, all the additional traffic can make things difficult."

In Redwater, a town of 2,400 just outside the northern boundary of the Heartland's heavy industrial shadow, local officials are preparing for a population surge of anywhere between 2,500 and 15,000.

Imperial Oil Resources Ltd. made Alberta's second big oil find at the Redwater field 58 years ago, and Mayor Connie Tchir says the town won't be caught unprepared again by a sudden influx of people.

"Overnight [58 years ago], we went from a hamlet of 99 to more than 4,0000 people. There were people living in home-made shanties," Ms. Tchir said.

"There's excitement now but with that comes the fear of change and other issues, environmental or otherwise. We want some growth, but we'd better be prepared."