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A welcome sign lights up the entrence to Chipman Alta. (Jason Franson/Jason Franson)
A welcome sign lights up the entrence to Chipman Alta. (Jason Franson/Jason Franson)

A little town on the oil sands prepares for $100 oil and a new boom Add to ...

Time moves slowly in Chipman, Alta., where the ancient hotel jukebox plays Toby Keith's I Love This Bar as old guys talk over beers about what it's like working in Fort Mac at 40-below. You can order a hefty helping of burger and fries with a Coke and still get a fistful of change from a $10 bill.

Chipman began life a century ago as a railway whistle stop and grew into a proud six-grain-elevator village. Now, the elevators are gone and the main street has been ravaged by fire and neglect. The town hangs on, barely, as a couple of gas pumps, three churches and a collection of bungalows in the blur of the fast, flat highway less than an hour east of Edmonton.

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For a long time, it looked like Chipman would join all the other ghostly Prairie villages bypassed by economic progress-- until one day in 2007, when a developer named Ted Rea blew in from Dallas with money and dreams and bought much of the place.

"Ted was just like Santa Claus on our doorstep," Mayor Jim Palmer says. "We figured it's either go with him, or the community would drop right off the grid."

Much has happened since Mr. Rea unrolled his vision of a town of 10,000 people, instead of the current 250 to 300 souls - a bustling "urban village" with affordable homes for the coming building boom in upgraders in the nearby Heartland region, just 20 minutes to the west.

Since then, oil went on a crazy ride to $147 (U.S.) a barrel, only to plunge to $35 within six months. Those new upgraders weren't built, and Mr. Rea's plans were put on hold.

But Chipman clung to its dream, and now it's coming back. Oil is close to $100 a barrel again and there are stirrings of hope in Upgrader Alley, where raw bitumen from the province's vast oil sands would be processed into synthetic crude to be shipped to refineries and transformed into gasoline and other fuel products.

But this time, there is a sense it will be different - not as out-of-control as in the frenetic 2004-08 period when Alberta was awash with excess. The province will still reap huge gains from rising oil prices. But there is more talk of diversification and value-added projects, instead of the gold rush fever of the past - and a greater confidence, perhaps, that this time the era of triple-digit oil won't be quite so fleeting.

As Alberta braces for the next wave of growth, it is hoping for a sustainable future, and nowhere more than in little towns on the periphery that tried to catch the tail of the last boom, before the global economy suffered a stroke. Now in Chipman, and nearby places like Lamont, Bruderheim and Redwater, they're hoping for a second chance at the last chance - and they hope this time it's for real.

Optimism returns

In Chipman, Ted Rea says he is still committed, having pumped about $18-million into the town. Through his company, Triland International, he bought up much of the main street, shedding or renovating shabby false-fronts, and buying 810 hectares of land, while prodding the mayor and council to obtain a provincial annexation that created a town footprint 14 times bigger than today.

So far, the only tangible results are three houses in various states of completion on the edge of the village. Building a new Chipman will not happen overnight, Mr. Rea said last week from Dallas, as he prepared for meetings with his financial partner, American National Insurance Co., of Galveston. But it will happen, he insists, and he hopes to start again within three months.

"It might take us a little longer to ultimately develop the whole project, but we've never walked away from a large development," said Mr. Rea, a 70-year-old native of Streetsville, Ont., who found wealth in another boom-and-bust economy, around Dallas.

"I have faith Ted will do what he said he would, and those times are getting closer," says Mr. Palmer, 63, mayor for the past 27 years. "We're just sitting here waiting for the next boom."

Such measured optimism would have been unthinkable in 2007, when the energy surge was in full force. Fort McMurray was on fire, and the talk in Alberta was about potential upgrader projects in the Heartland region, an industrial complex around Fort Saskatchewan, just northeast of Edmonton. There were projections of eight upgraders and 23,000 jobs. The speculation drew outside investors like moths to a flame.

At the time, Mr. Rea was doing reclamation work after a hurricane on the Gulf Coast. While there, he got to know contractors allied with North American Oil Sands, which was planning a Heartland upgrader. On behalf of North American, he came north looking to build housing for thousands of workers. He happened upon Chipman, a town down on its luck but with an infrastructure designed for better times.

Its key asset, besides proximity to the Heartland, was its place on the Vegreville water line - and an underutilized sewage system. For a developer, this was nirvana, and there was also a local mayor who was a tireless booster. Mr. Palmer's pitch was: "Holy shit, Ted, we have an infrastructure here for 2,500 people and we only have 250."

North American's housing plans were shelved, but Mr. Rea remained intrigued. As he pushed his concept of affordable homes for working families and retirees, Mr. Palmer and the other two councillors bought in. Also, local MLA-turned-premier Ed Stelmach helped accelerate some provincial approvals.

The land annexation was approved in March, 2010, but there wasn't much cheering. In the interim, the economy had gone to hell, and is still working its way back. Instead of eight upgraders, only one is certain - the joint venture of North West Upgrading Inc. and Canadian Natural Resources Ltd., a three-phase project in the final negotiation phase with the province.

Neil Shelly, executive director of the Alberta Industrial Heartland Association, says the region will probably get one additional upgrader in the next 15 years, and possibly a couple more petrochemical complexes and some co-generation facilities. It's not like 2007, but it does mean hope for Chipman.

A focus on value added

A lot depends on the economics of upgrading. There is a strong push in the region to stop shipping raw bitumen south to U.S. upgraders and refineries, and perform more value-added activities in the area. North West and CNRL are negotiating a deal with the province to process bitumen collected under royalty-in-kind payments, which along with CNRL's output, would provide feedstock for the new upgrader.

That is the future, insists North West chairman Ian MacGregor, who urges Alberta to act like an owner and reap the rewards from more integrated, value-added projects. The government is already one of Alberta's largest bitumen owners, with the potential to become the biggest. And the Heartland, home to a big petrochemical complex and a Shell Canada upgrader-refinery project, is a natural location.

His vision is not predicated on $100 oil, but on the realities of geopolitics and population growth that dictate the world will need more of Canada's energy. "I think these forces are absolutely relentless," Mr. MacGregor says, adding that the Heartland will thrive because of its access to labour, pipelines and water.

North West will employ 8,000 people during its decade-long construction period and 400 permanent employees. Add another upgrader of similar scale, and there would be even more jobs.

Will Chipman get a piece of that action? Last week, there was concern about the looming exit of Premier Stelmach, a supporter of Chipman's plans who was willing to put provincial money behind rural development.

Whatever the economics, Mr. Rea insists he is the right kind of developer for this climate. He finds kindred spirits in Alberta, which he sees as the future growth engine of Canada. "Like Texas, this is a good environment to do business in. We like the political system here."

And Mr. Rea knows politics. About 35 years ago, he was a councillor in Streetsville, Ont., working with a colleague named Hazel McCallion. Ms. McCallion moved up to mayor of the amalgamated city of Mississauga and Mr. Rea focused on his property business. He saw greener pastures south of the border, and in 1978 headed down to Texas with some partners.

The Texas connection

They bought a parcel of land near the Dallas-Fort Worth airport, called the Valley Ranch, and made a deal with the Dallas Cowboys and their owner Clint Murchison Jr. to move the Cowboys' head office and training facilities there.

Those were heady times. On the website of the Dallas Cowboy Cheerleaders, retired cheerleader Dana Presley Killmer recounts her hectic life as PR director for both Triland and the Cowboys. She spent her days planning parties -_"some I was not allowed to attend" and doing "dog and pony" shows for potential investors, while evenings were devoted to her cheerleader training. Ms. Killmer retired in 1985 and, after a bit part on Hee Haw, raised her kids Montana and Stevie Jo.

The Triland-Cowboys partnership ended under new team ownership, and as the city plays host to the Super Bowl this weekend, Mr. Rea regrets there are no tickets for him. But his Dallas experience is relevant to Chipman's future, he insists. "I started Valley Ranch in 1981, and there are still small pieces of land being developed. But there are 34,000 people that sleep there every night. When I first looked at that land, everyone thought I was crazy."

Some people said the same of Chipman, but in the village there are plenty of true believers. After all, what else is there? The community had been up and down since the late 1800s, when the first settlers came from Ontario, followed by a wave of Ukrainian farmers.

In 1905, the Canadian Northern Railway, a precursor of the Canadian National, arrived. In fact, the town was named after Clarence Campbell Chipman, an aide to Canada's railway minister. It existed because there had to be grain elevators at regular intervals to serve farmers. But as the agricultural economy shifted and grain trade was centralized and automated - and two fires devastated the main street - Chipman declined.

Now there are signs of change. As well as the trio of unsold homes, there's a Triland sales annex that, at the moment, is not selling houses. Across the road is the refurbished convenience store, Chipman Market, which Graham Johnson, an Edmonton concert promoter, manages on behalf of Ted Rea and his sons, Ted Jr. and James.

Mr. Johnson had never heard of Chipman before the Reas came to Edmonton, looking for someone to run concerts that would draw attention to their housing plans. It is a form of guerrilla marketing, says Mr. Johnson, who held an April Wine concert last summer for about 1,000 people just off his parking lot. "I will bring in Corb Lund or Great Big Sea and sell some houses," he vows.

The Reas renovated the store but had trouble finding a suitable tenant. So they offered Mr. Johnson a lease, and the opportunity, he says, to be a kind of "chamber of commerce" for the village. The store is essential to the strategy, he says, quoting the Reas as saying "a town without a store is just a collection of houses."

The same could be said for a town without a watering hole. Cindy Lindemann and her husband Rob bought the Chipman Hotel just as Mr. Rea was heading into town. Since then she has received nibbles about selling, but it would have to be the right price and to someone who would carry on the tradition of the 64-year-old hotel.

Her key condition would be: "Don't touch that jukebox. There are songs on there that go back 100 years." It's just like the town it sits in, one foot in the past and another in a future that, in a more measured Alberta, is stirring with some hope for continued survival.

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