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Oil downturn drives 'Alberta invasion' across B.C. border

You can spot the ground forces of the Alberta invasion on just about any frontage road in Northeast B.C.
Competition with the 'Alberta advantage' is a fact of life in Northeast B.C. But during a downturn, it's a whole lot tougher.

You can spot the ground forces of the Alberta invasion on just about any frontage road in Northeast B.C.

Their trucks, bearing red and white plates, idle outside of all-night restaurants, hotels and gas stations, destined for oilfields outside Dawson Creek and Fort St. John.

For their B.C. competitors, the sight of those trucks is salt in a wound.

"We could go stand on the Alaska Highway right now and I could point out which trucks aren't from here, which ones don't have a local guy in it," said one frustrated oilfield service company owner in Fort St. John. "(They're) Drayton Valley trucks, Red Deer trucks, Edmonton trucks. Unless that (driver) buys a bag of chips at the Esso on the way through, there's no benefit to him being here."

Through the collapse in oil prices, B.C. has been a relative bright spot, with a handful of major energy companies continuing to drill for oil and gas. For the companies that service those companies—haulers, vac truckers, pressure truckers, tankers and others—competition is fierce.  

B.C. companies say they're feeling increasingly pinched by Albertans who are hungry for work and able to underbid them on contracts. While cross-border competition and the "Alberta advantage" are facts of life in Northeast B.C., the competition is more pronounced when times are tough.

"Before (the price collapse) Alberta was busy, so there was no reason for them to be over here," said the company owner, who asked not to be named for fear of losing business. "And we never go the other way, because obviously the savings are one way and not the other.

That's changed in the past six months.

"I lost a bid to a company the other day who would drive from Grande Prairie to Fort St. John for free, charge from Fort St. John to the field, and then drive back for free," he said. "We have a saturated market as it is, so I'm not going to lay all my problems at the doorstep of Alberta. But it's insult to injury. Not only do we have to fight amongst ourselves, we have to fight against the Albertans that are coming in."

Art Jarvis, executive director of the industry group Energy Services B.C., said it's an issue he's raised with the provincial government with little success. 

"There are companies that have gone broke here in the past eight months, and there's more coming," Jarvis said.

There isn't much data on the cross-border trend, but the numbers that do exist suggest a shift in the past year and a half.

According to Statistics Canada data, B.C. and Alberta typically trade people at a roughly even rate. In the third quarter of 2014, for example, 5,916 people migrated from B.C. to Alberta, while 5,946 went from Alberta to B.C.

In the past four quarters, Alberta to B.C. migration has pulled ahead. In the last quarter of 2014, 507 more people migrated from Alberta to B.C. than the other way around. In the first two quarters of 2015, that gap grew steadily, from 1,118 to 1,179.

The increase coincides with the collapse in the price of oil, but it's hard to say whether the two are connected. It's also unlikely those figures would reflect an Albertan who works temporarily on a well site in B.C.

For Jarvis, the root cause is taxes, beginning with the seven per cent provincial sales tax. Low taxes allow Alberta companies to "deadhead" on transportation—eating the costs of getting to the B.C. Peace. Even then they're competitive, sometimes able to undercut by anywhere from $50 and $100 dollars an hour depending on the contract.

"There are so many advantages that it easily adds up to 25 per cent (off)," said Jarvis.

While some Alberta companies will set up an office in Fort St. John—"so they're renting property, they're actually here rather than just having a phone number here and forwarding it to Grande Prairie"—others aren't paying their fair share, he said.

"They're using our road infrastructure, they're using our hospitals when they get hurt or sick," he said. "They just don't drop much money here but use all the amenities we have."

The solution?

 "A tax incentive to companies that can legitimately say they're working in natural gas up here, they have a base here, they pay B.C. corporate taxes, they hire BC people and they insure their vehicles here," said Jarvis. "That's all good business."

That proposal hasn't resonated with the provincial government, he says.

When asked what the government has done to incentivize the hiring of B.C. companies, a Ministry of Natural Gas Development spokesperson cited the infrastructure royalty credit program, aimed at speeding up development by "creating access to unexplored resource areas."

"Companies use oil and gas service and supply contractors to build these roads and pipelines," the spokesperson wrote in an email, saying the credit is expected to result in over $448 million in spending in 2015.

 "The ministry reviewed four completed road projects in 2014 and found that almost 90 per cent of the work was done by B.C.-based companies."

But for the Fort St. John company owner, that doesn't address the reality on the ground since the oil crash.

He added there are implications for the government's goal of becoming an exporter of liquefied natural gas.

"(They) want to do all this LNG stuff, but there's no protection for us, the guys who've got a stake in the ground in British Columbia, employing B.C. people, buying B.C. fuel, paying B.C. taxes.

“The Alberta invasion will literally roll over top of us,” he said.

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