MAY 2005 ISSUE
DOING BUSINESS
Major Projects List Gets Longer and Richer
BY NORDAHL FLAKSTAD
Freelance Writer
Projects planned or waiting to start in Alberta are currently worth more than $100 billion, says Alberta Economic Development — a new record in the department’s regular round-up of information.
There are 946 projects worth $2 million or more that are scheduled to begin within two years, are under construction or were recently completed. This is the first time since 1982, when such surveys began, that the combined project value has exceeded $100 billion.
More than half the total spending, or $69 billion, involves the oil sands. Infrastructure comes in at $11 billion, institutional $6 billion, oil and gas $4 billion and power $4 billion.
Alberta Budget Increases Infrastructure Spending
Alberta Finance Minister Shirley McClellan’s recent provincial budget includes infrastructure spending of $9.2 billion in the next three years. The forecast 2005-08 infrastructure spending represents a 40 per cent increase over the 2004-07 projection.
Of the total, $644 million goes to upgrade existing schools and build new ones.
A further $469 million will go to post-secondary educational facilities.
Hospital and healthcare infrastructure gets $1.6 billion. That includes $500 million for a teaching centre and day clinic at the University of Alberta Hospital and for the start of construction on the South Calgary Hospital. Complete expansions and upgrades to health facilities in Edson, Lethbridge and Rimbey are also budgeted.
Stantec
Makes Major Move With California Acquisition
The staff may be humming California Here I Come at Stantec Inc., following the largest acquisition to date by the Edmonton-headquartered engineering, architectural and design firm.
Stantec has entered an agreement to acquire The Keith Companies, or TKC, an engineering and design firm based in Irvine, Calif., for between $90 million and $95 million. TKC works from 10 locations in California and another eight stretching from Ann Arbor, Mich., to Portland, Ore.
Stantec will now have offices in 68 locations and staff exceeding 5,000. The
addition of TKC will increase his company’s U.S. revenues by 72 per cent,
says Stantec President and CEO Tony Franceschini, P.Eng.
SNC-Lavalin Awarded Contract for Horizon
SNC-Lavalin and its joint venture partner, Snamprogetti Canada Inc., have been awarded a lump-sum contract by Canadian Natural Resources Limited to provide engineering, procurement and construction management services for the Horizon oil sands project’s secondary upgrader. The value of the contract plus field construction is about $550 million.
The secondary upgrader, consisting of three hydrotreaters, will process 110,000 barrels a day of feedstock from the primary upgrader into synthetic crude components. Engineering is underway and construction is scheduled to begin in August. The expected mechanical completion date for the construction of all units is May 2008.
Canada West Confirms Oil Leads Way in Alberta
Alberta’s economy is “firing on (almost) all cylinders,” according to a Canada West Foundation report. In fact the foundation even put those words in the title.
Todd Hirsch, the think tank’s chief economist, said: “While most of the strength in the province’s economy can be traced back to the strong energy sector, other areas in the economy are also doing well.”
Firing on (Almost) All Cylinders: Alberta’s Economic Profile and Forecast points out that manufacturing was up nearly 15 per cent in 2004, and that the housing market is still very strong, driven largely by strong employment gains and in-migration. Total exports surged to a record of almost $67 billion.
The few weak spots are caused largely by external factors, such as the BSE crisis and the strong Canadian dollar. Diversification of the Alberta economy away from oil has met with mixed success and, where it has occurred, it often draws its strength from the strong energy sector.
Canada West forecasts Alberta’s real GDP growth will be 3.7 per cent in 2005 and 3.3 per cent in 2006.
North-South Power Link Gets Regulator’s Approval
The Alberta Electric System Operator has received approval from the Alberta Energy and Utilities Board for a planned 500-kilovolt electrical transmission line between Edmonton and Calgary.
Scheduled for 2009 completion, at a cost of $340 million, the 300-kilometre trunk line will be the biggest addition to the provincial grid since the 1970s. The exact route hasn’t been determined and will be subject to a future EUB review.
Chinese Company Buys Into MEG Energy
China National Offshore Oil Corp. has paid $150 million for a 16.7-per-cent stake in MEG Energy Corp.’s planned oil sands operation near Fort McMurray
The news follows months of speculation about such a buy-in and represents the first Chinese investment in the oil sands. MEG Energy holds a two-billion-barrel oil sands lease at Christina Lake and plans are proceeding for pilot operations expected to produce 25,000 barrels of bitumen a day by 2008.
Enbridge and China Sign Gateway Memorandum
Enbridge Inc. has reached a memorandum of understanding with PetroChina International Company Limited to cooperate on the development of the Gateway Pipeline and the supply of crude oil from Canada to China. The proposed pipeline would transport 400,000 barrels per day of Alberta oil sands production from Edmonton to the West Coast for tanker shipment to China, other Asia-Pacific markets and California.
The agreement provides for Enbridge to assist PetroChina to aggregate long-term supplies of Canadian crude oil.
Edmonton Eyes Pilot Projects to Cut Greenhouse Gases
As part of its effort to meet targets for greenhouse gas emissions, the City of Edmonton will spend $3.2 million in the next few years on a variety of pilot projects — including hybrid diesel buses, fuel-cell trucks and LED street lighting.
The initiatives are part of the city’s commitment, along with other municipalities, to achieve a reduction of 20 per cent below 1990 GHG levels by the year 2012.
“Reaching that 20 per cent figure is contingent on a number of emerging technologies,” said Senior City Environmental Engineer Mark Brostrom, P.Eng.
Group Urges Province To Meet Fort McMurray Infrastructure Needs
Industry has thrown its weight behind calls by the Regional Municipality of Wood Buffalo that the province upgrade municipal, housing, health and educational infrastructure in the Fort McMurray area.
According to the Athabasca Regional Issues Working Group, whose membership includes the municipality and 24 companies, a failure to take action in the recommended areas could stifle oil sands
development. That, in turn, could mean a loss of $1.6 billion in royalties, the working group told the Alberta Legislature’s Energy and Sustainable Development Committee.
The recommendations include opening up Crown lands for housing in the face of the area’s population growth of eight per cent per year.
Major New Investments in Saskatchewan Potash
Companies are sinking more money into Saskatchewan potash mines. The new investment comes in response to the province’s announcement of a 10-year royalty holiday on new potash production.
The most ambitious plans are those of the Potash Corp. of Saskatchewan, which will spend $339 million expanding its Lanigan and Allan mines. Mosaic Company, formed by the merger of IMC and Cargill’s fertilizer operations, will spend $34.5 million at its Esterhazy operations, and is considering additional investments at Colonsay and Belle Plaine. Agrium Inc. will complete an $80.2-million expansion at Vanscoy in 2006.
Forest Producers Seek Export Assistance
The Alberta Forest Products Association has asked the provincial government for support in marketing Alberta forest products abroad. The backing would parallel the kind of export assistance given to the beef industry in the wake of the BSE crisis.
Asia represents a promising market for Alberta forest products but educational efforts are needed to make builders in the region more familiar with wood-frame construction.
The association represents 60 companies in an Alberta industry that combined to ship $4.3 billion in product last year. That represents a 16 per cent rise over 2003.
The industry benefited from a buoyant North American housing market in 2004, despite duties on exports to the U.S., which averaged 20.2 per cent and cost Alberta producers $200 million.
Deal Assures Flow Of Elk Valley Coal
Canadian Pacific Railway and Elk Valley Coal Corp. are back on track after settling a freight-rate dispute that threatened to sideline exports of metallurgical coal to a the sizzling Asian steel market.
The five-year agreement ensures flow of coal to Asia via Vancouver from the Elk Valley operations in southeast British Columbia. The accord
also calls for CPR and Fording Coal Trust to end related legal and regulatory wrangling.
Miramar Checks Out Nunavut Gold
Miramar Mining Corporation will spend $13 million on drilling programs this year, designed to upgrade gold resources at its Hope Bay, Nunavut, project.
These programs will total approximately 29,000 metres of drilling and utilize six to eight drill rigs. The results, if positive, would be incorporated into feasibility studies in 2006. In addition, about $2 million will be spent on permitting the company’s Doris North project and community relations, and $1 million on feasibility studies.
North-South Tug-of-War Possible Over Alberta Water
Alberta is at cross-currents in its water management policies and faces “an imminent water shortage,” suggests a report prepared by agrologists.
The province has traditionally moved water to where it’s needed. It may be time to redirect that policy toward moving people and industry to the water, says the study by the Alberta Institute of Agrologists.
It notes that in Southern Alberta, surface water resources are almost exhausted, and that since 1991 the province has limited expansion of irrigation.
Inter-basin water transfers are likely to prove controversial. Transfers from north to south are also problematic, particularly with oil sands development expected to place heavy demand on water resources.
Auditor General To Review P3 Plans
Alberta’s Auditor General Fred Dunn will conduct a value-for-money audit on the public-private partnership project announced earlier this year for construction of the southeast extension of Edmonton’s Anthony Henday Drive ring-road. The P3 project was awarded to the Access Roads Edmonton Ltd. consortium.
The audit will be released as part of the Auditor General’s annual report in October. Infrastructure and Transportation Minister Lyle Oberg expressed confidence that the P3 approach would be “unequivocally” cheaper than the traditional approach to highway contracting.
According to Mr. Dunn such arrangements are “appropriate when the project justifies it. We come down on the side of producing value for money for public-sector dollars.”