| Previous page | Table of Contents | Next page |
The SYD Road P3 Partnership:A different kind of joint venture
Ron Ramsay
The Sierra Yoyo Desan (SYD) Road is a 188 km resource road leading from Fort Nelson to the gas fields of northeastern British Columbia (see map). It is a heavily used road providing access to over 27,000 square kilometers. The road often experiences traffic volumes in excess of the nearby Alaska Highway. The majority of vehicles traveling the road are large oilfield trucks which cause significant damage to the road on a continuous basis. When traffic is heavy during wet conditions, the damage can be significant. These harsh conditions require the road to be maintained regularly and at a high cost.
Prior to 2005, traffic entered the road via an actively used railway bridge straddling the Fort Nelson River (see left photo below). The dangers of this are obvious, but the greater danger was the steep switchback approach to the bridge on both sides. Over the years, several accidents occurred at the bridge approaches. While I’m unaware of any trucks being hit by a train while crossing the bridge, the risk is obvious. Surprisingly, there have been several head-on collisions on the bridge itself.
The road needed a significant upgrade and a new bridge in order to bring it to acceptable standards. While the vast majority of traffic is energy company related, the SYD is a public road and not a private resource road. Ownership and management of the road is a provincial responsibility.
In 2003, the government of British Columbia decided to proceed with a substantial upgrade project, but was reluctant to provide full funding as the road benefited the oil and gas industry almost exclusively. They decided to design a Public Private Partnership (P3) to fund, upgrade and operate the road. A P3 partnership is a 3-way joint venture with governernent and industry partners and a private sector concessionaire/operator.
A committee of government and oil industry representatives was struck in 2003 to establish an agreement to fund and operate the road. The Joint Management Agreement between Industrial Users of the Sierra Yoyo Desan Road and the Province of British Columbia was signed in November 2003. Forty nine petroleum companies operating in NE BC executed the agreement. It was agreed that the road upgrade costs and ongoing maintenance would be carried by the Province and industry in equal amounts. Revenue was generated through higher road use fees, 50% of which are deductible from royalties.
Concurrent with the industry agreement work, an RFP working committee proceeded to implement the selection process for the road operation/concessionaire. This was conducted via the public tendering process. Bids were received from several international and domestic consortiums. Ledcor Construction of Vancouver was selected in December 2003, having presented a superior bid from both the road upgrade design and cost perspectives.
Representatives of the working committee, provincial officials and Ledcor then proceeded with negotiations on the Concession Agreement and Ground Lease. This agreement between the Province (Lessor) and Concessionaire (Lessee), established the terms of construction and operations. The road will be operated under the Concession Agreement for a fifteen-year term.
The physical upgrade commenced in 2004 and was completed in 2006. This involved construction of 30 km of new road, the installation of a new two-lane bridge over the Fort Nelson River (see photo) and the redesign of thirteen corners and intersections to improve safety. The road bed was improved throughout its length with grading and new gravel. The total cost of these upgrades was $40 million.
The road is managed under the above referenced agreements through an executive committee made up of representatives of petroleum companies, government officials and representatives from Ledcor.
There were many complications and opportunities for failure during the design of the P3, Joint Agreement drafting process, the concessionaire selection and Concession Agreement negotiations. However, through the commitment of the companies involved and particularly, the vision and skill of the representatives from government, this project succeeded.
The Sierra Desan Yoyo Road P3 is a lesson in how joint ventures can work!
Further information on the project can be found on the BC Government website or Ledcor’s site.
| Previous page | Table of Contents | Next page |