Alaska construction to reach $5.3 billion

Most of the spending to come from the private sector, oil and gas industry

Posted: Friday, April 23, 2004

ANCHORAGE - Governments and private industries should spend $5.3 billion on construction in Alaska this year, a forecast by University of Alaska Anchorage economists says.

That's about the same level of spending as in 2003, according to the report, which was commissioned by the Construction Industry Progress Fund and the Associated General Contractors of Alaska.

Most of the spending - $3.25 billion - will come from the private sector, the report says. Nearly half of that estimate is from the oil and gas industry.

Public spending is forecast at about $2.07 billion, with $550 million going for defense, $350 million for highways and $300 million for schools.

The report was co-authored by Scott Goldsmith and Mary Killorin at UAA's Institute of Social and Economic Research. It's based on interviews and estimates provided by the companies and public bodies, Killorin said.

She said some industries declined to reveal proprietary information, which could affect the estimates.

"It's a very educated guess," Killorin said Thursday. "The idea is to get trends."

Dick Cattanach, executive director of the contractors' association, said past estimates have been off by as much as 10 percent.

This is the first year the group has commissioned UAA to do the study.

Cattanach said the mining industry should see a lot of growth in the near future. The forecast says $300 million is expected to be spent on exploring, developing and upgrading mines in the state.

Construction was recently halted at one of Alaska's biggest mining projects, the Pogo gold mine near Delta Junction. Teck-Pogo Inc. is waiting for an appeal of its wastewater permit to be resolved.

Overall construction spending over the past two years has remained high, even though the oil industry cut about $500 million in spending three years ago, Cattanach said.

This year, the state's biggest producers - BP Exploration (Alaska), ConocoPhillips and Exxon Mobil - are expected to spend about $1.2 billion on projects to boost production in their existing fields.

With exploration estimates and a possible project to reconfigure the trans-Alaska pipeline, the oil and gas industry's spending forecast jumps to $1.5 billion.

Residential construction spending is expected to be $700 million, driven by expectations of increased military deployments and mine developments in the Fairbanks market.

Construction spending

The breakdown of 2004 Alaska construction spending estimates:

Private spending: $3.25 billion.

• Oil and gas: $1.5 billion.

• Residential: $700 million.

• Commercial: $400 million.

• Mining: $300 million.

• Infrastructure: $250 million.

• Other basic industry: $100 million.

Public spending: $2.065 billion.

• Defense: $550 million.

• Highways: $350 million.

• Schools: $300 million.

• Other federal: $300 million.

• Other transport: $300 million.

• Denali Commission: $100 million.

• Other state and local: $100 million.

• Alaska Railroad: $65 million.

Total: $5.315 billion.

Source: UAA Institute of Social and Economic Research.

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