Gas company stays in business
Inuvik Gas ends talks with town, seeks renewal of franchise agreement: mayor
Paul Bickford
Northern News Services
Published Thursday, May 22, 2014
INUVIK
It looks like the natural gas distribution system is off the table.
Floyd Roland: Mayor says negotiations on a new franchise agreement between the Town of Inuvik and Inuvik Gas will begin in the near future. - NNSL file photo
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Negotiations have ended between Inuvik Gas Ltd. and the Town of Inuvik on a possible sale of the natural gas distribution system in the community.
Now, the two sides will begin negotiating a new franchise agreement under which Inuvik Gas will continue to serve the town.
Mayor Floyd Roland said the town was notified a week or so ago of the company's decision.
"They have decided that they feel there's still more value in the system as it is now," said Roland.
The mayor said negotiations on a new agreement will begin in the near future.
The current agreement, which has been in place for about 15 years, expires in August.
Inuvik Gas announced its decision to seek a renewal in a May 14 news release.
"Over the past year, we have worked with the town to explore options and we've determined the best solution is for Inuvik Gas to continue to own and operate the system," stated Brad Driscoll, general manager of Inuvik Gas, in the news release.
Driscoll added a renewed franchise agreement will strengthen the company's relationship with the Town of Inuvik and demonstrate its commitment to the people of the community and the North.
When contacted by Inuvik Drum, he said, "After exploring all options, the best solution was to come back and work on a franchise agreement."
Inuvik Gas maintains there is long-term value in the community distribution system, which can be adapted to accommodate other fuel options in the future.
That includes the possibility of liquefied natural gas (LNG), which has a developing supply chain from the south.
"I don't think at this stage of the game we would want to preclude anything," Driscoll said.
"To keep energy working here in Inuvik and to provide customers with the best value, I think it's only fair to look at all solutions."
Inuvik Gas will take a co-operative approach with the Town of Inuvik on a new franchise agreement.
"I think we'll be sitting down sometime in the very near future and hammering out some details from there," Driscoll said, adding it is best not to negotiate a new agreement in public.
Inuvik Gas Ltd. is owned by Inuvialuit Petroleum Corporation, ATCO Midstream NWT Ltd. and AltaGas Utility Holdings Inc., which make up Ikhil Joint Venture.
The company's initial purchase proposal to the town included the Ikhil natural gas field, but the town was only interested in buying the distribution system – an underground pipeline.
Roland explained there are positives and negatives for the town in renewing a franchise agreement, rather than pursuing a sale of the distribution system with Inuvik Gas.
"They've decided to stay in the game, so that's all right," he said. "From our side, to know that the big partners are staying in the game is good."
Roland noted those big partners, like AltaGas and ATCO, work throughout Canada, and have the knowledge and resources to invest in newer technology.
AltaGas recently announced plans to build an LNG facility in Dawson Creek, B.C., he added.
"That shortens the hauling of the product up here. So that may mean a lower cost, as well."
On the other hand, Roland said not buying the distribution system is a lost opportunity for the town to become more involved in long-term options for the community, even though that would have been a challenge based on the town's current financial situation.
"The future development of the North still remains in the hands of others, with us sort of being in the driver's seat to a certain degree," he said.
The mayor also noted the town will continue paying someone else for a final product and that supplier will make the profit.
Inuvik has been facing rising prices for natural gas since one well at the Ikhil field stopped producing in 2011 and reserves at the other well are depleting. Inuvik Gas almost exclusively supplies synthetic natural gas – which is a mix of propane and air – supplemented by natural gas.
Heating oil used to be the norm before Inuvik Gas won the franchise agreement and about 90 per cent of homes in the community converted to the cheaper natural gas. Most of the other homes still use heating oil, while some have switched to pellet stoves.
Roland is optimistic that negotiations for a new franchise agreement with Inuvik Gas can be concluded in the available time frame.
