Industrial megaprojects: Canada continues to take advantage of long-term demand from Asia
March 26, 2013
Slowdown? Not yet! Despite a global economic slowdown, announcements of new industrial megaprojects in Canada have actually increased during 2012. The total value of ongoing megaprojects (declared value of $1 billion or more) in Canada rose from $253 billion at the end of 2011 to $357 billion at the end of 2012. New projects worth a total of $39 billion were announced in the first half on 2012 and nearly twice that amount ($67 billion) was announced during the latter half of 2012. In total, more than $100 billion worth of new projects were announced in Canada in 2012.
A boom is underway in the transportation and export of natural gas. While new announcements in 2011 were mostly related to the mining sector, 2012 saw a sharp rise in oil & gas projects, particularly regarding transportation infrastructure. Canadian investors are seeking to export hydrocarbons to the United States and overseas, via pipelines and, increasingly, LNG terminals. Indeed, high price differentials exist between North American and Asian markets in particular, prompting investors to refocus on overseas markets, especially in the context of increasing energy independence in the United States.
Will the growth in oil & gas transportation projects continue in 2013? E&B DATA does not think so. The technologies that allowed the energy revolution in the United States are already being exported overseas, and their deployment in Asia in particular should significantly reduce their natural gas imports in the next ten to fifteen years. Given that the construction of pipelines and LNG terminals can easily take between 4 to 8 years, the window of opportunity could be limited for Canadian exporters. Announcements of new projects are therefore expected to decline.
To export raw materials or to process them in Canada? That is the question. A net energy exporter facing less hungry foreign markets, in addition to problems reaching them, Canada could well process more of its mineral resources, using its excess energy. The rise of new natural resources processing projects in 2012 seems to fit within this context.
More detail on specific projects is available in our new publication “ECONOMIC SLOWDOWN? NOT YET! Industrial Megaprojects in Canada’s Oil & Gas and Mining Sectors in 2012“