Jameson Berkow

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Fort McMurray has fallen and the oil sands boomtown will need the rest of Canada to help it get back up again.

It could take another few decades, but eventually the multi-billion dollar bitumen extraction industry surrounding the northern Alberta oil sands capital will go bust for good. After all, even if Fort McMurray stages a near-term comeback, the resource that has built this boomtown will eventually be depleted. As the oil sands have loomed larger and larger in this country’s hopes for economic growth, there is no post-oil sands strategy in place. The longer that persists, the more likely the city – and to some extent the entire country – will one day face an unprecedented economic challenge.

Canada’s national economy has been growing for years on the back of oil sands expansions and had been counting on continuing growth from the bitumen extraction sector as a means of continuing that economic march upwards. Chris Cox, senior oil and gas analyst for Raymond James, notes the oil sands’ contribution to Canada’s total gross domestic product was previously set to double over the next decade but those high-growth hopes disappeared along with triple-digit oil prices.

“Absent that growth, really the only way we can have these secondary benefits across the rest of the country is by finding a new growth engine,” Cox said.

Melissa Blake has spent the better part of the past two decades leading the local government, having been first elected as a city councillor for the Regional Municipality of Wood Buffalo (which includes Fort McMurray) in 1998 and having served as mayor since 2004. She believes the northern city can continue to serve as the country’s growth engine even if the worst case scenario plays out where the oil sands boom times never come back.

Her proposed solution lies even further north.

“I look at the Northwest Territories and I don’t know what their future is but I bet it’s bright and if [Fort McMurray] can support them that is something I think this community could aspire to,” Blake said. “As we go into the future … I think this could become a service center of the north.”

It is true that one of the effects of climate change has been to brighten the economic prospects of Canada’s north, in particular by opening up the Northwest Passage to year-round freight travel. However, most economists are not counting on Canada’s northern territories for any significant contributions to national GDP growth in the coming decades and most of the other ideas for a post-oil sands future in Fort McMurray still in large part rely on the oil sands themselves.

“What about all the byproducts… all the spinoff industries from the oil sands?” said Jeff Penney, Wood Buffalo’s economic development manager. “[This] is a place where lots of people come to see what is going on in the oil sands, so how do we capitalize on that, how do we build a strong and vibrant tourism industry?”

Nothing has been written down thus far in terms of answers to those increasingly prevalent questions. Blake believes even the informal conversation about Fort McMurray’s future has not been happening fast enough.

“I suspect not,” she said. “I suspect that people will live within the context of what they know and what they know is existence and economy and energy use and supply. They look at this economy and say we need to diversify. Well, we have always needed to diversify but we just haven’t been able to successfully branch out that way.”

As the city searches for answers, the same questions must be addressed on the national level. The oil sands industry accounts for roughly twice as much of Canada’s total GDP as it did before the last energy downturn in 2008. And the latest oil price crash has already cut billions of dollars from the federal government’s revenue stream. Ottawa’s formerbudget watchdog warned this week that the old rules for measuring the fallout of lower oil prices no longer apply.

“We used to have rules of thumb that a five-dollar reduction in the price of a barrel of oil costs the federal government about a billion dollars in revenue,” Kevin Page, Parliamentary Budget Officer from 2008 until 2013, told BNN on Thursday. “But around oil prices now that are so much lower than what we were seeing five or six years ago, some of those rules of thumb probably don’t hold as well.”

That means the impacts are still being felt across the country, with arguably more pain still to come. For now, the person in charge of growing Fort McMurray’s economy for future generations is confident the city will keep expanding – albeit at a significantly reduced pace. Yet just as diversifying Canada’s economy will require a complex, multifaceted national conversation, Jeff Penney knows coming up with a post-oil sands plan will take time.

“We are trying to lay the foundation now for what [the city] will look like in 50 years,” said Jeff Penney. “But 50 years is a long ways off so it is tough to say for sure what it is going to look like; Rome wasn’t built in a day and neither was this region.”