Oilsands dreams in jeopardy in northern Sask. town

Last Updated: Monday, March 9, 2009 | 9:10 AM

CBC News

A Saskatchewan town that hoped to cash in on the oilsands boom is getting hit hard by the economic downturn.

Unemployment in La Loche in the province's northwest has traditionally been high — about 80 per cent, according to local officials.

In recent years, jobs in and around Fort McMurray, Alta., have provided a beacon of hope for families in the community of 2,300 people.

Many local people headed to fly-in camps around Fort McMurray to make a living.

But that was before last year's collapse of oil prices and the worldwide credit crunch.

With dwindling access to credit, companies have had to scale back spending plans in Alberta.

Activity on the Saskatchewan side of the border, where exploration for oilsands is underway, but there has been no production yet, has also been affected.

Oilsands Quest, the main company involved in oilsands exploration in Saskatchewan, had to cut back by about two-thirds, president Jamey Fitzgibbon said.

"At the camp right now, there are about 100 to 120 people. Last winter, at the peak, it was around 400," Fitzgibbon said. "So yeah, it's been a big change, a dramatic change, in activity levels."

The cuts are temporary, and exploration will still go ahead, but it will be at a much slower pace, for the foreseeable future, Fitzgibbon said.

Low oil prices affecting everyone: deputy mayor

The downturn has caused the only motel in La Loche to shut its doors.

Without oilsands customers, the motel could not make ends meet, former manager Terrence Montgrand said.

La Loche Deputy Mayor Randy Herman says it's been a tough winter and he's hoping things will turn around soon.

"With oil prices being quite low, it's affecting everyone, not just in La Loche, but throughout the world," he said. "I'm not surprised, but I'm anticipating it'll go back up and hoping more people will be working up there again."

La Loche is 650 kilometres northwest of Saskatoon.