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Heating costs doubled

Natural gas hike has hit Wells residents hard

Terry Halifax
Northern News Services

Norman Wells (Jan 08/01) - A doubling of the cost of natural gas has Norman Wells residents feeling the cold shoulder from Imperial Oil.

Under a new contract with the town, Imperial is hiking the cost of natural gas by 97 per cent.

The old contract expired November 1, 2000 and under the new agreement gas prices increased to $5.93 per gigajoulefrom $2.77 per gigajoule for the year 2001.

Mayor Kevin Diebold said the Jan.1 increase comes at the worst possible time.

"It's something people haven't adjusted their costs for," he added. "If it had been phased in during the summertime and we'd known it was coming in three or four months from now, people could have set things aside."

Since there is no pipeline to carry the gas south, the residents feel the gas is merely a by-product of the oil plant that would otherwise be burnt off in the flare stack and they should not be charged the full market rate for the gas.

"We think it's a by-product and we don't think they should regulate it, because Norman Wells is an anomaly; it's totally different from other places down south where they can put it in a pipeline," Diebold said.

The mayor said they plan to meet with Imperial to work out a more favorable solution to the increase, so residents won't have to bear the brunt of the increase during the town's slowest economic time of year.

"We're going after them, let's put it that way," he assured.

Plant foreman and acting area manager for Imperial Oil in Norman Wells, Nolan Palmquist said the company needed to establish a benchmark, so they used the Alberta Reference Price (ARF).

"You have to base the value of a product on something and the Alberta Reference Price seems like a good way to do it," he said.

Palmquist said the price is still good value compared to other fuel sources such as diesel and heating oil.

As well, he said the gas price is considerably lower than some of the spot prices paid in some southern states and provinces, where, he said, gas is being sold for as much as $13 to $15 per gigajoule.

As for the complaint that the company is gouging residents through the sale of the gas, Palmquist had little sympathy.

"They can think however they like -- it is a product and there is no market to the south, but is the only supply of natural gas in the Sahtu," he said.

"There are other alternatives for heating, but I think they'd be quite a bit higher than what they are paying for natural gas."

He agrees the increase does hit hard and the oil company plans to work with the town to reach an equitable solution for all residents.

"It is a pretty hefty hit all at once, so we are waiting for a formal request from the town to have a meeting to see what we can do if maybe we can do some kind of staging with the increase," Palmquist said.