Fire, flood, COVID and the oil crash: Fort McMurray businesses aim to bounce back from hard luck

Anyone who buys a restaurant knows the business is not for the faint of heart. In an oil town, where fortunes can rise or plummet in an instant, the hospitality industry can be especially tricky.

Owen Erskine understands the situation well after taking over Mitchell’s Cafe in downtown Fort McMurray, Alta., in 2014, just as oil prices reached incredible highs and then crashed to the ground.

As someone who was born and raised in the community, fluctuating commodity prices is nothing new to Erskine. But the series of misfortunes that followed, each its own stressor, has left a mark on this community in northeastern Alberta.

The wildfire in 2016 scorched neighbourhoods, the 2020 flood devastated much of the downtown, and the COVID-19 pandemic has impacted everyone, especially recently as case counts have spiked at work sites in the oilsands, prompting the Regional Municipality of Wood Buffalo to declare a local state of emergency.

“Calgary has been through floods. Slave Lake had a big fire. Some others know how that feels, but I think for me, Fort McMurray is one of the only places to know how all of those things feel, one after the other,” said Erskine, who has had to scrap expansion plans for his business.

This week marks the five-year anniversary of the wildfire, which to many is a reminder of how long Fort McMurray’s struggles have dragged on and raises questions about how the business community can get back on its feet. 

The evidence of struggle is most visible downtown, with dozens of storefronts and office buildings sitting empty.

A decade ago, Fort McMurray was an economic magnet, attracting tens of thousands of workers and tens of billions of dollars in investment to the oilsands.

These days, however, some local businesses have to look elsewhere for work. That includes Akron Engineering, which helps governments and energy companies develop infrastructure projects. The business is based in Fort McMurray but has had to pursue work as far away as Calgary and Saskatoon.

“We need to evolve and be more sustainable and think out of the box,” said Nayef Mahgoub, the company’s founder.

“It’s been tough. Things haven’t been getting better, in general. However, people here in Fort McMurray are very resilient. They are tough people.”

Fire, flood and COVID-19

Things have changed from the early 2010s, a torrid stretch that saw oil prices soar to more than $110 US a barrel. 

Beginning in 2014, crude prices began a long, painful slide that saw the North American benchmark price eventually drop to below $27 US a barrel in February 2016. Layoffs hit the oil sector hard, including 1,000 workers laid off in one day in 2015.

Then came the wildfire.

The Horse River fire began on May 1, 2016, and soon burned a dangerous path toward Fort McMurray. Upward of 80,000 people were evacuated from the community.

Ultimately, the fire destroyed more than 2,400 buildings in Fort McMurray and the surrounding area. The blaze caused an estimated $3.8 billion in insured damage.

The natural disaster forced several oilsands facilities to temporarily shut down, which reduced Canada’s crude oil exports and caused the national gross domestic product to slip in the second quarter of 2016.

The community began rebuilding from the fire in the years that followed, and there was optimism again as 2020 began that the oil sector would soon see better days.

But, instead of a turnaround, more bad luck was on the horizon.

An international price war poured cheap oil onto the market as the pandemic dried up fuel demand. Amidst the tumult, oil prices briefly fell below $0.

The collapse in prices saw oil companies dramatically scale back their spending plans. Layoffs continued to haunt the sector. COVID-19 infections also hit workers at oilsands camps and mining sites. 

Just a few months into the pandemic, severe flooding along the Athabasca River saw much of Fort McMurray’s downtown underwater.

Roughly 100 businesses were estimated to have been damaged, and now, more than a year later, fewer than 50 have opened their doors.

WATCH | Why businesses say Fort McMurray’s core is in need of a turnaround:

Despite recent hardships, there’s pride in Fort McMurray about the community’s future, says Mitchell’s Cafe owner Owen Erskine. 1:14

Strain and recovery

The impact of the flood, pandemic and oilpatch struggles hasn’t been easy to navigate, with the unemployment rate still above nine per cent in March.

“This is a very challenging time for businesses,” said Dianna de Sousa, executive director of the local chamber of commerce.

There is some concern of flooding again this spring. Local emergency officials have spent at least $10 million preparing in case high water again threatens the community.

Despite the hardships, efforts are underway to provide a boost to businesses, including a “shop local” gift card program launching this month and more grant program funding from the regional municipality to help downtown stores pay for renovations.

The local housing market has also looked healthier this year, recording the highest number of first quarter sales since 2014, widely interpreted as a show of confidence. Residents continue to speak hopefully of the future, talking about community pride and supporting one another.

Of course, the region, much like the province, continues to lean on its biggest sector.

There’s hope for a sustained rebound in oil prices — fuelled by an expected surge in demand once the pandemic ends — that will deliver better days and stability to the oilsands.

But it’s also a sector facing big challenges amid efforts to slash greenhouse gas emissions to try to prevent climate change. 

Although oilsands production is still growing, a surge of workers isn’t expected to flow into the community like in the past.

Local economic development officials see further opportunity in energy innovation — including artificial intelligence and automation technologies — that’s being used in the oil sector.

“There is an increasing demand for skills in the digital economy and in the knowledge economy,” said Kevin Weidlich, CEO of Fort McMurray Wood Buffalo Economic Development and Tourism. 

“If we can foster that here, we can apply that same learning in different places all over the world. Fort McMurray can also be a centre of excellence for mining on a global scale.”

Like other communities in Alberta, Fort McMurray is also looking for ways to diversify. 

The economic development office last year launched Startup YMM, with the goal of helping entrepreneurs launch new ventures in the community.

Weidlich also sees big potential for tourism in the region, naming a long list of local adventures such as hunting and fishing lodges, dog sledding and views of the northern lights.

WATCH | Thinking outside the box a necessity, says business owner:

Be nimble and think outside the box, among other strategies, says Nayef Mahgoub, with Akron Engineering. 1:35

The last obstacle, right?

Denise Allen can only smile when recalling the boom years of the early 2010s, when she earned $80,000 just in tips as a waitress in one year. These days, most servers only make enough to cover their bills, she said.

Instead of congested roads and highways shuttling workers and supplies to the bustling oilsands facilities in the region, Allen can now see straight down Franklin Avenue, the main downtown strip, with sometimes only a few vehicles in sight.

“The downtown core is really suffering. Everyone tries to do their best and stay positive,” she said. “Every year we say, ‘This is our year, this is going to be our summer.’ But then we get the fire, we get the flood.”

Allen is the general manager of 57 North Kitchen + Brewery, which opened in 2019. It’s one of the largest restaurants in the city’s core, but no patrons are allowed inside because of current government pandemic restrictions.

Still, Allen appreciates how the restaurant has been able to survive by having the brewery sell its product in stores across the province and having two takeout kitchens operate out of the building, too.

She can only hope the pandemic is the last obstacle in Fort McMurray’s string of misfortune.

“Floods, fires. We’re just hoping there’s not going to be any locusts.”

WATCH | Staying positive and hoping the community’s luck improves:

The downtown avoided the destruction of the wildfire, but was hit hard from last year’s flood, says Denise Allen with 57 North Kitchen + Brewery. 0:48