Major projects driving boom

Ashley Fitzpatrick
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APEC releases inventory, highlights billions in potential spending

Analyst Patrick Brannon smiled gleefully in front of a meeting of about 150 businesspeople and government officials in St. John’s Wednesday morning.

He was presenting the results of the annual Atlantic Provinces Economic Council (APEC) major projects inventory, an accounting of projects “valued at $25 million or more, $10 million or more in P.E.I.” in various stages of development.

“I kind of feel like Dr. Evil in the Austin Powers movie,” he said with a laugh, announcing the grand total with flare. “One hundred billion dollars.”

Newfoundland and Labrador is leading the count in Atlantic Canada. Almost half of all major project spending is set to happen here — $48.1 billion. It is an 11 per cent bump over the same outlook last year.

“Right now there is a lot of momentum in terms of project activity (in the province), because of strong oil prices and other commodity prices that are driving mining developments,” Brannon told The Telegram.

The projects land anywhere from pre-construction and engineering to a breath before completion. The list for Newfoundland and Labrador includes the Hebron oil development ($8.3 billion) and Muskrat Falls (entered at $5 billion, as the Gull Island portion was considered at too early a stage). It also drills down to include a $112-million provincial recreational infrastructure program and $35-million RCMP capital program.

Oil and gas, mining growth

Increased work on Hebron is not the only big spend in the oil and gas sector.

The Hibernia Southern Extension, Hibernia platform upgrades and White Rose expansion work are included in the inventory. Maintenance work at Terra Nova and refinery upgrades at Come By Chance are also in the count.

Spending on offshore exploration between now and 2019 is expected to run a total $1.2 billion, it notes.

The mining count includes the $828 million expansion by IOC, but also the direct shipping ore development by Tata Steel and New Millenium, upgrades at Wabush Mines and costs for reactivation of the Fluorspar mine.

Topping the list, the Long Harbour nickel processing facility is expected to require $1.2 billion of investment this year ($3.6 billion total).

On all counts, businesses within the local supply and service community are poised to benefit.

Boom in St. John’s and Labrador

Actual investment in St. John’s in 2012 is expected to reach $650 million.

Outside of oil and mining projects, housing developments in the city are listed as a third “growth driver” for the provincial economy.

The residential developments run from the construction on lands formerly part of CFS St. John’s to the 900-home Clovelly Trails subdivision in the East end (83 homes are to be built in 2012).

The Glencrest Subdivision, backed by former Premier Danny Williams, has been counted in part (a $400-million first phase, running to 2017).

Outside of residential developments, St. John’s is home to commercial developments including office buildings, new hotels, an airport expansion, a new long-term care centre, expansion to the St. John’s Convention Centre and more.

Labrador is a second hot spot, Brannon said, with project investment expected to grow to as much as $3 billion by 2014, up from $100 million in 2009. “Looking ahead there are nearly $16 billion in potential projects in Labrador in this year’s inventory.”

‘There’s always risk’

The numbers for actual investment are expected to drop down in 2013, the report of the Halifax-based think-tank states. Yet, as several multi-billion dollar projects come onstream, the numbers are expected to rise again in the 2014-2017 timeframe.

However, there are points of concern.

“There’s always risk out there. For example if commodity prices were to drop off quite a bit over the next little bit that could hurt the viability of some of the projects — not so much in the oil and gas sector, but certainly the mining developments in Labrador,” Brannon said.

The economic effect of ongoing struggles in the Eurozone is another.

Labour shortages also have the potential to cause trouble. “If labour costs get too high then they can drive up the costs of the projects and make them less viable,” Brannon said.

The Council of Atlantic Premiers released its own totals Thursday for major projects in various stages of development. The collective has stated 354 major projects, with a value of $71 billion, are currently underway.

afitzpatrick@thetelegram.com

Organizations: APEC, RCMP, Hibernia Southern Extension Tata Steel New Millenium Brannon said.The Council

Geographic location: Newfoundland and Labrador, Hebron, P.E.I. Atlantic Canada Gull Island White Rose Terra Nova Long Harbour

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Recent comments

  • Retired
    June 07, 2012 - 19:30

    Great, but what about the rest of the provience?

  • Rob
    June 07, 2012 - 14:34

    BOOm, what a load of @$*%. Where are all these jobs. I have applied for jobs at Long Hr and bull arm never even got a response. You have to be in the union, the same union that wont accept new members, Only for Alberta this province would all be on welfare. just visit the airport and see the lineups. Instead of a rotation I will soon be a permanent Alberta resident. Long live the oil sands.

  • David
    June 07, 2012 - 11:42

    "...Outside of oil and mining projects, housing developments in the city are listed as a third “growth driver” for the provincial economy....." Great news for "the province". Quite a "provincial economy" we're building here. World-beaters!

  • Dan
    June 07, 2012 - 09:46

    Eastern Health is laying off hundreds and Tom Marshall is saying no to any pay increases to civil servants, nurses and teachers. Good thing our province is doing well heh?

    • jeff
      June 07, 2012 - 11:21

      Already my point below is proven. Sad.

  • Turry from town
    June 07, 2012 - 07:28

    So the demand for housing increases due to this economic racetrack created by one industry. Enter the greedy realestate agents and developers with the smiles of a pirate. As people lineup for housing,they see this as an opportunity to gouge people by jacking up the cost of housing all the while blaming it on labour and materials as the cause but at the same time filling their pockets.This in turn increases the artificial value placed on your home by the city for the purpose of taxes,and not by the amount of service you receive. So no,this is not a good news story,just ask the average income earner,single parent family homeowner,or fixed income pensioner.

    • Jeff
      June 07, 2012 - 10:12

      I got to say I agree with you but not 100%.. This "boom" (that will hardly be one) will drive up cost of living, like real estate. This could be a good thing, but it won't because the wages are not good compared to other booming cities. The problem is location of these sites. If one was to work in Labrador building a hydro station or Long Harbour or wherever, and live in St John's, they are just the same to be in the oil sands getting $20 n hour more with all paid flights and all paid accommodations (and pretty slick I might add).. This in turn creates the "labour shortage" that they speak of. There is no shortage of labour, but shortage of wage. So like Calgary, Edmonton, Red Deer etc, this could be a good thing, but it won't. Wait and see

    • Island Man
      June 07, 2012 - 11:21

      NL is now in a global market for labour and housing, but NL wages are still on a local scale. Attraction of workers is one thing, but we must also consider retention.

    • BC
      June 07, 2012 - 12:45

      Welcome to a capital market. Increases in demand result in an increase in price. If people weren't willing to pay the increased price, then no homes would be sold. If someone is willing to pay $250,000 where someone else is only willing to pay $230,000, then the first person is going to get the house, and prices rise. A company that offers products at less than consumers are willing to pay may not be seen as greedy, but they won't be in business for too long either. The underlying problem is not "greed". Developers and real estate agents are simply meeting demand. The issue, if there is one, is that wages are not increasing for anyone outside of the oil and gas sector. Don't blame the real estate market, blame slow-moving wages.