http://www.dcnonl.com/article/id57701/--1-billion-plus-canadian-construction-projects-a-handy-reference-guide-part-2

November 4, 2013

$1 billion-plus Canadian construction projects: a handy reference guide (Part 2)

ALEX CARRICK

Chief Economist, CanaData

The most recent rate-setting meeting of the Bank of Canada lowered the forecasts of economic growth for the nation to +1.6% in 2013, +2.3% in 2014 and +2.6% in 2015. The comparable projections made a quarter ago in July were +1.8% for 2013 and +2.7% for both 2014 and 2015.

One contributing factor to the output downgrades has been the government shutdown in the U.S., with uncertainty still lying ahead. But the BOC takes a broader perspective when it says a pick-up in Canada’s export sales and in investment spending has been delayed longer than expected.

Is there any perhaps-overlooked information that can be cited to relieve some of the gloom? Yes! This is where CanaData comes to the rescue. We’ve compiled a report of all the construction projects planned or underway in the country valued at $1 billion or more each.

An earlier Economy at a Glance, with almost the same title but designated as Part 1, reviewed the inventory of rapid transit and bridge jobs, as well as electric power projects. In Part 2, we’ll look at investment plans in mining, oil and gas and the institutional sector.

In an effort to move through a great deal of material with some brevity, there will be more consolidation of information in Part 2 than there was in Part 1.

Mining:

Internationally-exchanged metal and mineral prices are taking a beating at present, but once global trade picks up again — and there is evidence this is occurring, with Europe’s economy finally showing signs of life and China regaining forward momentum — many major projects are on the drawing boards, just waiting for go-aheads.

Two of the most prominent sub-categories are iron ore projects in eastern and northern Quebec and — here’s a mouthful — chromite, magmatic sulphide, platinum, palladium, titanium, vanadium, nickel, copper and gold deposits in the memorably-named Ring of Fire region of upper Ontario.

Among the Quebec projects are an expansion (underway) to an iron ore mine at Mont-Wright by ArcelorMittal Inc.; construction of an iron ore processing complex (proposed) near Sept-Iles by Severstal (based in Russia) and IMBS (South Africa); and an open-pit iron ore mine (in the planning stage) in the Ungava Bay region, near the Inuit village of Aupaluk, by Oceanic Iron Ore Corp.

The largest concentration of Ring of Fire work in Ontario is in the McFaulds Lake area, about two-thirds of the way between Lake Superior and where the province ends at Hudson Bay. So far, the projects remain largely in the proposal stage. Noront Resources is the largest stakeholder in the region. Its Eagle’s Nest site has been moved along the furthest. Also nearby, Cliffs Natural Resources has ambitious plans for North America’s largest chromite deposit.

Also among large mining projects are the Mary River iron mine on Baffin Island (planning underway); the Muskowekwan (to be built on aboriginal lands by Encanto Potash Corp.) and Jansen (timeline being stretched out by BHP Billiton of Australia) potash mines in Saskatchewan; and the Éléonore gold mine (being built by Goldcorp. Inc.) in northern Quebec.

Oil and Gas:

The oil and gas category has four major components: (1) the stand-alone Hebron offshore project in Newfoundland and Labrador; (2) a number of very large oilsands extraction and processing projects in Alberta; (3) liquefied natural gas (LNG) proposals not just in B.C., but in several other locations across Canada; and (4) lots and lots of controversial — because they may have impacts on the environment and they involve negotiations over land claims with native groups — energy pipeline proposals.

With respect to Hebron, front-end engineering design is underway for this $10 billion project which has Chevron Canada as its lead partner.

The list of the largest oilsands projects includes: the Narrows Lake steam-assisted gravity drainage (SAGD) plant for Cenovus Energy (construction underway), $3.0 billion; the Ells River “in-situ” SAGD project, west of Fort McKay (proposed), $16.8 billion; the Kearl facility expansion, Wood Buffalo, Imperial Oil (construction proceeding), $8.9 billion; the North West Upgrader, phases 2 and 3, northeast of Edmonton (proposed), $10.0 billion; and the Alberta First Nations Energy Centre upgrader, Teedrum Inc. (owner looking for additional backers), $6.6 billion.

Besides the best-known five major pipeline projects — TransCanada’s Keystone XL expansion ($7.0 billion); Enbridge’s Northern Gateway ($5.5 billion); Kinder Morgan’s TransMountain twinning ($5.0 billion); TransCanada’s Energy East ($12.0 billion) proposal; and Enbridge’s reversal of Line Nine — there are proposals for other major energy-gathering and transmission systems.

Among the LNG projects being proposed in B.C. are: Pacific Northwest LNG, Lelu Island, Port Edward, Progress Energy Resources Corp. (owned by Petronas of Malaysia), $9.0 billion; Kitimat LNG and Export Terminal, Apache Canada Ltd., $4.2 billion; and the LNG Canada plant at the former Methanex site in Kitimat, Shell Canada Ltd., $4.0 billion.

To carry natural gas to the proposed ocean-going trans-shipment terminals, there is the Prince Rupert transmission project, which will run from the North Montney field near Fort St. John, B.C. to Port Edward, outside Prince Rupert, on the Pacific Coast. At 750 kilometres, the price tag placed on this pipeline by TransCanada Energy Ltd. is $6.0 billion.

The current low price for natural gas in the United States and Canada has also opened up the possibility of major expansions to capacity in the petrochemical industry. Nova Chemicals is considering a major investment at its polyethylene plant at Joffre near Red Deer in Alberta.

Institutional and Other:

Among billion-dollar-plus institutional projects are medical centre complexes (Quebec, Ontario and Alberta) and education campus projects (Quebec and Ontario).

Among “others”, add to the mix a nitrogen fertilizer plant (Bécancour, Que.) and an international airport expansion (Vancouver, B.C.).

Let’s summarize the above findings. CanaData’s database includes 14 rapid transit and bridge projects of $1 billion or more each, for a total value of $24 billion; 10 electric power projects, valued at $44 billion in total; 10 mining projects adding up to $20 billion; 20 oil and gas projects combining for a $150 billion sum; and eight institutional and other projects for a further $15 billion.

This makes more than 60 projects with a total estimated value that is a staggering $250 billion.

Proceeding with many of these will provide a solid base for the nation’s future prosperity.

For that to happen, there needs to be a strong political and social framework, backed by two key commitments: (1) ongoing concerted efforts to expand foreign trade — the Comprehensive and Economic Trade Agreement or CETA with the European Union (EU) is a giant positive step — and (2) being on guard against unreasonable homegrown obstacles to development.