Infrastructure builds 2015

February 01, 2015

Private sector infrastructure plans have been affected by the precipitous drop in oil prices and weak base metal prices.

In the area ‘north of 56’ government capital spending forms the stable base while private sector capital spending can vary to a much greater degree due to commodity prices. In 2015 every jurisdiction faces challenges.

• Alaska’s Institute of Social and Economic Research predicts $8.9 B in infrastructure spending in 2015, with 2/3rds coming from the private sector and $3.8B from the oil and gas sector. Spending plans developed by the oil and gas companies during the last quarter of 2014 suggested an increase in spending of 18% for 2015 compared with the year before. However oil prices have fallen continuously since that time. Alaska’s State budget, with a new Governor, is projecting lower public infrastructure expenditures ($1.4B).
• The Yukon government presented a capital budget of almost $300M last year. The biggest ticket items were $48million for highway work; $14 million for bridges;$16.316 million for airports and $28 million for a new High School. The mining sector is facing a downturn with 2/3 active mines currently shutdown. Private sector capital expenditures are focused on a weak residential housing sector. 
• The Government of NWT’s capital budget is projected at $285M for the coming year. Health Care facilities and highways are the largest expenditures. Inuvik to Tuktoyaktuk All-weather Highway is the biggest single project. Gahcho Kué is an upcoming diamond mine project The Gahcho Kué project is the largest new diamond mine under development globally, and has the potential to become one of Canada’s major high-grade and long-lived diamond mines.
• The Government of Nunavut’s capital budget last year was $145M. Housing accounts for $30M, while Ec Dev and Community Services expenditures amounted to slightly higher amounts. The public sector also has a number of projects under development, including the $143 million Canadian High Arctic Research Station in Cambridge Bay and the $300 million Iqaluit airport upgrade. The giant Mary River project on Baffin Island has anchored private sector investment in the last two years. Baffinland also plans to further develop the property and its port infrastructure at nearby Milne Inlet, where ore will begin to be shipped in the 2015 open water season. Baffinland plans to invest some $740 million into mine and transportation infrastructure between now and 2016.

 

Commentary

For the most part the northern regions face curtailment in infrastructure building plans in 2015.  Nunavut and NWT have significant private sector infrastructure activity from large mines going into production. Yukon has robust public sector infrastructure investment but a weak private sector investment outlook. Alaska faces curtailments with its slowing oil and gas sector.

Sources

• a)http://alaskanomics.typepad.com/files/2015forecast.pdf



• b)http://www.finance.gov.yk.ca/pdf/budget/2014-15budget_highlights_e.pdf



• c)http://www.fin.gov.nt.ca/budget-documents/estimates/documents/2015-2016CapitalEstimates-Amended.pdf


d)http://www.gov.nu.ca/sites/default/files/files/Finance/Budgets/2014-15%20budgets/2014-15%20Capital%20Estimates%20-%20For%20Print.pdf


• e)http://www.nunatsiaqonline.ca/stories/article/65674nunavuts_economy_looks_strong_in_2015_report