Alberta oilsands comeback predicted to fuel economic growth
By MARKUS ERMISCH, QMI AGENCY
Last Updated: 24th December 2009
Following a sharp economic contraction this year, Alberta's economy is forecast to be one of Canada's fastest growing provinces in 2010.
Scotiabank economist Alex Koustas predicts that in 2010, the energy province's GDP will grow by 2.9% after shrinking 2.6% this year.
Only B.C., at 3%, is forecast to grow at a faster rate.
Come 2011, Alberta will be firmly planted ahead of other provinces, thanks to a growth rate of 3.5%, Koustas estimates. Much of the growth will be fuelled by a revival of the oilsands.
Benchmark oil prices have been trading near $75 a barrel for several weeks now, and Koustas said the commodity will stage "quite a comeback" next year.
That'll benefit what economists call fixed capital investments, which can be any construction project from a bitumen upgrader to a factory hall.
"Though planned capital project expenditures have eroded considerably over the past year," Koustas said, "activity is expected to pick up in the two years."
Falling construction costs and low borrowing rates, he said, have already put a number of previously stalled oilsands projects back on track.
But despite the more upbeat mood, not everything is rosy in the energy sector.
Natural gas prices, although recently lifted by a drop in temperatures, are still too low for new wells to make economic sense.
Koustas said natural gas prices will likely improve slightly next year, but not by enough to make a noticeable contribution to GDP.
Alberta's government, however, is widely expected to overhaul its royalty regime once a review of how competitive the province is relative to its peers is released.
http://www.edmontonsun.com/money/2009/12/24/12259311-sun.html
