Hicks on Biz: No coal in Edmonton's stockings this year BY GRAHAM HICKS, first published Edmonton Sun, December 21, 2017
Santa, you have already given Edmonton the best gift we could have asked for.
In 2017, Metro Edmonton somehow avoided slipping into recession.
Business-wise, things weren’t great, but they weren’t bad … and way better than 2016 which was an annus horribilis year.
The oil patch has learned to live with $50 a barrel oil (the benchmark $50 US for West Texas Intermediate). Of late, oil prices have looked positively balmy, floating up to $55 to $60.
Residential construction surprisingly picked up strength as the year went by … pent-up demand, confidence on the part of home-buyers, more young couples with good jobs, readying for kids.
As the Stantec and JW Marriott towers reach ever skyward, the Ice District construction employment has been a saving grace. The Valley LRT has also dented the unemployment ranks with that project now in its intensive construction phase.
The impact, or lack thereof, of oil and gas on Northern Alberta’s economy is increasingly complex.
On the one hand, the era of building huge oilsands plants has more-or-less drawn to a close.
The last of the mega-projects – Suncor’s Fort Hills, the Sturgeon Refinery outside Fort Saskatchewan – are moving from construction to operational modes, from thousands of workers to hundreds.
There’s still activity, but it’s comparatively small potatoes – a $600 million expansion here, a $550 million project there: Nothing like the $20 to $30 billion a year that was spent during the boom.
On the other hand, in regions with in-demand natural gas and gas-related “liquids”, things are picking up big-time.
The patch woke from slumber in Central Alberta and around Grande Prairie. Drilling, extraction and processing of products from the vast Duvernay and Montney natural gas basins have moved into high gear.
But in heavy-oil towns like Cold Lake, the recession continues. Rebuilding from the great 2016 fire has kept Fort McMurray’s economy moving, but the oilsands are nowhere busy as they once were.
On yet another hand, new mega-projects may take up the impending slack.
Inter Pipeline’s decision to go ahead with its $3.5 billion petro-chemical complex in the nearby Alberta’s Industrial Heartland is the best news in years, with its promise of 2,300 direct construction jobs and another 11,700 “indirect” jobs gearing up next year.
A similar new petrochemical plant is being contemplated in the same area, but not yet green-lighted by Pembina Pipeline.
The Sturgeon Refinery folks are waiting to hear if the provincial government will participate in its Phase 2. The government would have to take on risk, but the carrot is jobs, jobs, jobs. At the height of its Phase I construction, during the 2015/16 downturn, the refinery had 8,000 construction jobs happening.
Then there are pipelines – of which the debate and arguments have gone on so long as to numb us all. The three million barrels-per-day pipelines out of the oilsands are now at 100% capacity and more oil is coming – 100,000 more barrels a day here, 50,000 barrels a day there.
If it doesn’t go out by pipeline (with jobs to build those pipelines) it’ll go out in tanker trains, each tanker carrying 700 barrels of oil. Moving oil by train still creates jobs, but not nearly as many as pipeline building.
Back in the city, soon-to-be-legalized pot is hot. Between the Aurora Sky mega greenhouse at the airport and numerous other high-security grow-ops being built, an industry with likely thousands of secure jobs is being created.
Small high-tech companies are difficult to define and quantify. But some kind of critical mass is happening – hundreds of small companies with few but highly skilled workers may not be thriving, but they are surviving.
For all the doom and gloom around ND government tax ‘n’ spend policies, the sky may be sagging, but it hasn’t come crashing down. The minimum wage increase is having a bigger negative business impact than carbon and other new taxes. The general public seems indifferent to huge government debt.
Santa, your stockings may not be as full of perfume, dark chocolate and premium whiskey as they once were.
But at least this year you didn’t fill them with lumps of coal.