Hicks on Biz: We mustn’t count our chickens BY GRAHAM HICKS FIRST POSTED EDMONTON SUN: FRIDAY, DECEMBER 16, 2016
Never count your chickens until they hatch.
But as the beaks of the baby chicks break through their shells, things look promising.
Two new petro-chemical plants have been announced in Alberta’s Industrial Heartland – the enormous industrial park around Fort Saskatchewan. One will be in Sturgeon County, the other in Strathcona County.
These are economic development monsters – a total of $5.6 to $6 billion spent over the next four years, 4,000 skilled-trade construction jobs through 2021.
Dozens of local fabrication plant bosses aren’t sleeping these days, wondering where new business will come from as the Sturgeon Refinery and Suncor’s Fort Hills oilsands plant finish up construction. Two new petro-chemical plants will be a God-send.
But we mustn’t count our chickens quite yet.
The boards of the two energy companies involved – Pembina Pipelines (with Kuwaiti partner Petrochemical Industries) and Inter Pipelines – have not yet officially approved the expenditures. But both companies gave the provincial government permission to announce $500 million in “royalty credits”, subject to the projects going ahead.
Such great news, providing there’s no last-minute hitches.
Building the two plants will soak up a pile of tradespeople who’ve been sitting at home since the oil price collapse in 2014.
After the plants are up and running by 2021, employment shrinks to a couple of hundred per plant – but both will pay property and business taxes. Plant operators will have secure jobs and earn enough to be bumped into the ND government’s higher income tax brackets.
The ND government is rightfully trumpeting its petrochemical diversification plan, the $500 million royalty credit being as good as a straight cash subsidy for the new plants. Most analysts say the $500 million cost to the government is worth it, given the tens of billions to be generated from new economic activity.
Another factor justifies the subsidy. These plants could be built anywhere in the Pacific Rim. Dozens of countries/regions woo such companies with financial sweeteners. Without some government support, the most ardent subsidy haters admit we can’t complete. In the industry, executives like the way the New Democrats fashioned this particular subsidy.
Demanding regulations, world-class monitoring and ever-improving green technologies have earned “social license” for the Alberta petro-chemical industry. The communities bordering the Industrial Heartland say environment safeguards are working. And, of course, they enjoy the economic benefits.
As long as several newly announced projects go ahead, the “green shoots” Finance Minister Joe Ceci fondly dreams of may actually start peeping through the earth left scorched after the 2014 oil price collapse.
Some 40,000 oilsands construction jobs have been lost since 2014. Another 12,500 jobs will end as the Sturgeon Refinery Phase I and Suncor’s Fort Hills oilsands project both finish construction in 2017.
But here come the green shoots: Some 15,000 jobs if the Kinder-Morgan pipeline proceeds as scheduled, 7,000 jobs for Enbridge’s Line 3, now 4,000 jobs if the new petro-chemical plants go ahead.
The Sturgeon Refinery partnership is talking to the provincial government about Phase II. In a best-case scenario, agreement would soon reached on long-term bitumen supply and refining fees. The 7,500 workers now at the Sturgeon Refinery could stay on for Phase II.
What are the chances of the Sturgeon Refinery Phase II going ahead? “About 50-50,” wagers one insider.
Best-case scenario for Northern Alberta: 52,500 skilled jobs lost, but 32,500 skilled jobs created.
Which is a whole pile better than the ways things sounded a few months ago.
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