December 10, 2013
A new commodities giant struggles to emerge in an unspoiled land (Part 1)
There has been a longstanding tradition of comparing Newfoundland and Labrador with the other provinces in the Atlantic Region, especially Nova Scotia and New Brunswick.
In ways relating to the province’s emergence as a commodities giant, however, it may be more informative to line it up that other awakening juggernaut, Saskatchewan.
The population of Saskatchewan (1.1 million) is almost double that of “The Rock” (514,000), but that doesn’t take away from the fact that there are some strong similarities.
To provide further context, the latest population estimates for Nova Scotia and New Brunswick are 945,000 and 754,000 respectively, with Prince Edward Island at only 146,000.
The capital city of St. John’s, with a population of slightly over 200,000, accounts for approximately 40% of the province’s total census count. That statistic alone, demonstrating a high degree of urbanization, is a surprise.
Throughout this article, it will become apparent that the old ways of looking at the province have become outmoded.
In the latest Payroll Employment, Earnings and Hours report from Statistics Canada, average weekly earnings (including overtime) in Saskatchewan ($953.00) and Newfoundland and Labrador ($942.00) were second and third highest among the nation’s provinces.
Only employers in Alberta ($1,110.00) were writing bigger weekly pay cheques for their workers.
Canada is a nation dependent on exports. Through the first half of this year, the province accounted for 39% of the Atlantic Region’s total foreign sales.
New Brunswick, thanks to forestry, plastics and rubber goods in addition to energy, took a bigger share at 47%.
Newfoundland’s export role is more impressive within certain product categories. In the first half of 2013, fossil fuels made up 68% of Newfoundland and Labrador’s total export shipments.
Within the Atlantic Region, Newfoundland’s energy exports (56%) are more than half of the total. New Brunswick, thanks to Irving Oil’s huge refinery complex in Saint John, makes up almost all of the remainder, at 43%.
Newfoundland’s energy exports are still only a fraction of what Alberta ships out of the country, but they’re not out of hailing distance of what Saskatchewan contributes.
The latest Private and Public Investment in Canada, Intentions (PPI) survey from Statistics Canada sets out that owners will spend 83% more year-over-year on construction and machinery and equipment in oil and gas extraction in Newfoundland and Labrador in 2013.
That’s on top of a 77% gain in 2012. Plus there’s much more spending to come. The next offshore oil site will be at Hebron, with ExxonMobil as the lead partner. The estimated cost will be $14 billion, with the first oil scheduled to flow in 2017.
The other private sector participants are Chevron, Suncor and Statoil. The provincial government, through its separate agency Nalcor, also has an equity stake.
Hibernia was the first of the production platforms built in the Grand Banks. It was completed in 1997. The other two operational stations are Terra Nova (2002) and White Rose (2005). Work on Hebron’s gravity-base structure is already underway at Bull Arm.
The $4.7 billion slated for Newfoundland’s energy sector investment in 2013 is higher than Saskatchewan’s $3.1 billion. As to be expected, Alberta’s investment dollar figure for oil and gas extraction, at $45.4 billion, dwarfs all other provinces.
In metal and non-metallic mineral exports — a category accounting for 19% of Newfoundland’s total foreign shipments — the province’s share of the Atlantic total is nearly 70%.
Voisey’s Bay open-pit nickel extraction in Labrador has been another relatively new contributor to the economy. The legislature in St. John’s recently approved underground mining at the site, which will extend its life to 2030.
The Long Harbour processing facility will be fully operational in 2015, when it will generate even more revenue for provincial coffers.
To be continued in Economy at a Glance Part 2.