Hewers of wood and drawers of water? More like harvesters of bitumen and extractors of crude. With the price of oil expected to average US$100 per barrel for some time, business is set to boom for Canada’s resource-extraction firms and the companies that support them.
According to the Conference Board of Canada’s Spring 2011 “Provincial Outlook,” most provinces with substantial natural-resource bases will experience strong economic growth throughout the year, despite the still shaky economy. And much of that growth, particularly related to exports, will come from oil extraction.
The outlook is sunniest in Newfoundland and Labrador. That province’s heavy spending on mining and offshore-extraction projects of late coincides beautifully with a spike in energy prices. The Conference Board forecasts that this will translate into real economic growth of 4.6% this year—the highest of any province. The spinoffs will abound: investment in non-residential construction, for instance, is set to climb by 60% over this year and next on the Rock, reaching $3.8 billion in 2012.
As for the Alberta oilpatch, it is poised to regain the ground lost during the recession. Many mega-scale extraction projects shuttered in the downturn are back on track, and investment in the province’s non-conventional oil industry is forecast to grow by 25% this year. This will translate into a good 2011 for Alberta oil-and-gas support services, construction and retail firms.