Economic and political issues in NS

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Report forecasts boost for N.S. print this article
Economy should see growth in 2008-09: RBC

ECONOMY
ANDREA MACDONALD
The Daily News

EnCana's Deep Panuke project has been guaranteed by the company to create 1.35 million hours of work for Nova Scotians.
EnCana's Deep Panuke project has been guaranteed by the company to create 1.35 million hours of work for Nova Scotians.

Two major capital projects in the works should boost Nova Scotia's economy by about three per cent in 2008 and 2009 respectively, a new report suggests.

That would give this province the third highest economic growth in Canada, trailing only Alberta and Saskatchewan.

RBC released its latest provincial economic forecast yesterday, which predicts key economic benefits from the Deep Panuke natural-gas project and the Keltic petrochemical plant. The projections are based on such factors as housing starts, unemployment rates and the Consumer Price Index.

Deep Panuke, located 175 kilometres offshore Nova Scotia, finally got the go-ahead in 2007 and recently awarded its first major contract. Smaller contracts are coming onstream and there'll be more in 2008, as supplies and services are put in place to make the project happen.

The pipeline to transport the gas from the project site to shore will be installed next year, with the first gas still pegged for late 2010. EnCana Corp., the Calgary company behind the $700-million project, has guaranteed Nova Scotia more than 1.35 million person-hours of work.

"It's an indication of the business activity and new opportunities created by a project of this nature," EnCana's Halifax spokeswoman Lori MacLean said about RBC's report.

Derek Holt, assistant chief economist with RBC, said Deep Panuke should translate into well-paying construction jobs and strong retail sales. It's not just mega-projects like Deep Panuke and Keltic, however, behind the projected average growth of 3 to 3.5 per cent in 2008 and 2009.

"There's been a fair amount of strength in the domestic economy beyond capital projects that's been lifting Nova Scotia's prospects over the past year, and we expect more of that to continue," Holt said.

RBC also notes that construction activity is down eight per cent and the increase in resale home prices is modest, undoubtedly causing a further cooldown in housing starts and resales. An uptick in non-residential construction activity thus provides opportunities for firms and trades to diversify away from softening housing markets.

Holt noted that Deep Panuke is coming in at a time when natural gas prices are on the low side.

"Commodities are always a significant risk to evaluate in doing a forecast like this, but we're expecting natural-gas prices to hang in at around the $7 range, which would still mean decent margins, still mean that the different options along the engineering and construction phases of Deep Panuke will remain attractive and they'll still pursue it."

The $4.5-billion petrochemical plant has a planned startup of 2011 in Goldboro, Guysborough Co. When it's finished, it will be the largest industrial project Nova Scotia has ever seen.