Sierra Yoyo Desan Road

Sierra Yoyo Desan Road 

Location: Northeastern British Columbia

Status: Operational

Provincial/Federal/Municipal: Provincial

Value of Partnership: $40 million (capital) $2.5 million per year for O&M for inital 14 years of contract

Type of P3: DBFOM

Date of Financial Close: 2004

Date of Substantial Completion: 2005

Handback: 2020 (original date, maintenance contract extended to 2023) 

The Sierra Yoyo Desan Resource Road project modernized a critical transportation corridor serving northeastern British Columbia’s oil and gas sector. Extending roughly 180 kilometres north and east of Fort Nelson, the all-season gravel-surfaced road provides primary access to more than 27,000 square kilometres of resource development territory and supports year-round industrial activity in challenging terrain.

Prior to consolidation in the late 1990s, the route consisted of fragmented segments owned and maintained by multiple parties. Heavy industrial traffic, adverse weather and limited maintenance left the road frequently unsafe and impassable, restricting exploration and development.

In 2004, the British Columbia government consolidated the corridor under public ownership and selected a public-private partnership (P3) to deliver upgrades without direct cost to taxpayers. The agreement also formally integrated industrial road users through a committee structure and a system of fees and levies that funded construction and long-term maintenance.

At the time of construction, 40 to 50 companies, mainly in the oil and gas sector, used the road. There are no major communities along the route and the road carries little non-industrial traffic.

A 2004 Value-for-Money (VfM) report produced for the province noted using a P3 for the project would:

• Improve and maintain the primary route into B.C.’s northeast oil and gas fields, facilitating a one-time, but sustained increase in annual oil and gas royalties paid to the Province of B.C. of approximately $50 million to $60 million;
• Complete the necessary road improvements at no direct cost to taxpayers. Payments in the range of $8 to $9 million per year will be borne by industrial road users and offset by royalty rebates totalling 50 per cent of these fees and levies, or approximately $4.25 million per year;
• Protect B.C. taxpayers from project risks such as cost overruns because the private partner assumes most of these project-related risks;
• Help to create jobs and increase economic activity in the northeast;
• Maintain free and open public access to the road, and equitable access for industrial users; and
• Tie payments to performance levels; the private partner must meet agreed upon standards before it is paid for improvements and maintenance.

Completed in August 2005, the P3 project included a new 22-kilometre bypass providing a direct connection to Fort Nelson, a two-lane bridge over the Fort Nelson River, replacement of key bridges, widening and surface improvements along the existing alignment and a 15-year operations and maintenance phase upon completion of construction.

Construction finished three months ahead of schedule. 

The upgraded road improved safety strengthened all-season access and supported sustained growth in regional resource development while maintaining free public access to the corridor.

In 2020, Ledcor secured an additional three-year contract to maintain the road under performance standards aligned with the BC Ministry of Transportation’s highway maintenance requirements.

READ MORE: CASE STUDY

Partners:

Public: British Columbia Ministry of Energy, Mines & Resources

Private: SYD Road Limited Partnership (Ledcor CMI Ltd., Ledcor Highways Maintenance Ltd., Buckland & Taylor Ltd., Peter Kiewit Sons Co., Kledo Construction, McElhanney Consulting Services Ltd., Trow Associates, and Triton Environmental Consultants Ltd.)

Awards:

• National Awards for Innovation & Excellence in P3s' Gold Award in Project Financing, 2004