Construction spending expected to increase

Spending on construction projects in Alaska is expected to increase this year according to the University of Alaska’s Institute of Social and Economic Research. The 2014 construction spending forecast was put together by the ISER researchers for the Associated General Contractors of Alaska.

The researchers believe that construction spending in both the public and private sector will top $9.2 billion this year. That’s up 18 percent compared to last year’s spending level.

The number of those employed in the construction industry is expected to remain stable this year at around 16,300. ISER notes that most of the growth in private construction spending will come from the oil and gas industry. The forecast is that the private sector will spend over $4.2 billion this year on construction projects. That’s up 33 percent compared to 2013.

According to the forecast ConocoPhillips is scheduled to do quite a bit of exploratory drilling this year including developing the large CD-5 satellite, while BP has announced an expanded capital program this year that includes well work-overs in the Prudhoe Bay field. The other major oil company, Exxon Mobile, is expected to continue the work developing the Point Thomson field.

The forecast also outlines the exploratory and development work planned for this year by several smaller oil and gas companies including ENI, Pioneer, Brooks Range Petroleum, Repsol, and Linc Petroleum. The recent uptick in activity in Cook Inlet is expected to continue this year.

The forecast notes that Hilcorp, which recently purchased the assets of Chevron and Unocal, plans to drill around 10 new wells this year. Other companies expected to be active this year in Cook Inlet include Buccaneer, Furie and Cook Inlet Energy.

Chart of spending projects from pg. 2 of the report.

Chart of spending projects from pg. 2 of the report.

While construction spending by oil and gas companies is expected to be up this year, spending by mining companies is expected to be down with a forecasted total of $205 million. The researchers with ISER suggest that the drop in the price of gold is one of the reasons for the drop in spending. The forecast notes that spending for drilling and other site work will be down at the Donlin Creek, Pebble and Livengood projects.

The forecast anticipates that spending by seafood processing companies will be significant with about $60 million in expected spending this year on 2 seafood processing plants in Naknek. Construction spending on hospitals and health-care infrastructure is expected to be similar to last year’s level with the largest planned project at the Alaska Native Medical Center in Anchorage. That project will include a residential housing facility and a new parking garage.

Public spending on highways and roads is forecasted to be about $765 million this year. That includes the Wood River Bridge to connect the North and South shores of Aleknagek.

Spending on airports, ports and harbors is forecasted to be about $425 million dollars. Spending on construction projects associated with education is forecasted at $477 million dollars this year. That includes the construction of a new school in Koliganak, which is expected to be largely completed this year. Construction will also get underway this year for the school in Quinhagak. The 2014 construction forecast also points out that the Coast Guard will be building a new hangar at Cold Bay along with new housing on Kodiak Island.

The construction industry in Alaska is a major player in the overall economy with well over 16,000 official employees. However, the recently released forecast notes that there are an unknown number of “hidden” construction workers that work in other industries like oil and gas, mining, utilities and government. There are also an estimated 9,000 self-employed construction workers in Alaska.

You can read the full construction spending forecast for Alaska on the University of Alaska’s Institute of Social and Economic Research website.

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