Kylan Dales gave up a banking career to work out of a mobile office and plow his pickup truck through snow in the oil fields of Saskatchewan.
The 30-year-old’s starting salary as a field operator for PetroBakken Energy Ltd. matched what he made as a retail marketing consultant at Servus Credit Union. Dales’s career shift reflects a “rotation” of demand that Bank of Canada Governor Mark Carney says the economy needs -- toward business investment and exports and away from consumer spending.
While most of Canada faces sagging growth and slowing labor markets, Saskatchewan is benefiting from corporate investment aimed at tapping global demand for natural resources. Saskatoon-based Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market capitalization, has expanded capacity. Cameco Corp., based in the same city and Canada’s biggest uranium producer, is building its Cigar Lake mine atop the world’s largest undeveloped high-grade uranium deposit.
“There is more going on in this province now than I have ever seen,” said Gavin Semple, 67, chairman of farm-equipment maker Brandt Industries Ltd. in Regina, the provincial capital. “Whether it’s population growth, investment, almost any criteria that you want to use to measure, this is a high point,” said Semple, who’s worked in the province for more than 40 years.
Saskatchewan’s 3.9 percent jobless rate is the lowest among Canada’s 10 provinces and well below the country’s 7.2 percent average. The province’s budget is in surplus, while other governments struggle with deficits. Its economy will grow 2.3 percent this year, compared with 1.6 percent for the country as a whole, according to an April 4 report from Toronto-Dominion Bank economist Jonathan Bendiner. Next year, the province’s growth is forecast to accelerate to 3.2 percent, outstripping the nation’s 2.6 percent pace.
Other cities and regions are struggling. Home sales are declining in Vancouver, while manufacturers in Ontario and Quebec are dealing with slower U.S. orders and a currency that strengthened 42 percent against the U.S. dollar over the last decade. Finance Minister Jim Flaherty has also switched his focus from stimulus spending to eliminating a budget deficit, while warning consumers to curb their own record debt loads.
The situation is different in Saskatchewan. The population grew 1.6 percent to 1.07 million over the past year, provincial Finance Minister Ken Krawetz said in a March 20 budget speech. Local companies have still needed to recruit workers from Ontario, Ireland and the Philippines to fill the gaps.
Melbourne-based BHP Billiton Ltd. is making sure it has the creature comforts needed to entice workers to its Jansen site, a proposed potash mine about 140 kilometers (87 miles) east of Saskatoon. The world’s largest mining company hired Calgary-based ATCO Ltd. to build a camp with 2,586 beds, a 1,200 person diner, a gym with two squash courts, two golf simulators and an elevated running track, according to BHP spokeswoman Bronwyn Wilkinson.
China is the world’s largest potash consumer and Saskatchewan is home to the world’s largest deposits of the mineral used in fertilizer. Economic growth in China, the world’s second-largest economy, unexpectedly lost momentum in the first quarter, with output rising 7.7 percent from a year earlier, compared with a gain of 7.9 percent the previous quarter, the National Bureau of Statistics said in Beijing today.
The report helped send commodities and stocks lower. The Standard & Poor’s 500 Index dropped 2.3 percent to 1,552.36 in New York. The S&P Supercomposite Homebuilding Index declined 6.3 percent as a gauge of confidence among U.S. homebuilders unexpectedly fell in April. Canadian stocks also were lower, with the Standard & Poor’s/TSX Composite Index sliding 2.7 percent to 12,004.88, led by oil and mining shares.
While the data out of China adds to concern that the global economy is slowing, the pace of growth among emerging Asian economies remains stronger than in North America.
Canadian and Indian nuclear regulators signed an agreement last week that moves the countries closer to completing a pact that will allow Saskatchewan to export uranium for civilian use to India.
On top of these resources, Saskatchewan is benefiting from output from the Bakken oil formation, the same crude source that has led to a boom in North Dakota, on the other side of the 49th parallel.
Oil from the Bakken deposit is also lighter than the oil-sands crude from Alberta. As a result, Bakken crude trades at much less of a discount to West Texas Intermediate than Alberta’s Western Canada Select. Bakken UHC crude traded for $89.79 a barrel on April 12, while Western Canada Select was at $77.54, both less than the $91.04 WTI Midland price.
That discount cost the provincial government of neighboring Alberta C$6 billion ($5.9 billion) in revenue, Premier Alison Redford said last month, “equivalent to our entire education budget.”
The fiscal pressure has weighed on her government, with only 29 percent of Albertans saying they support Redford, according to a survey published last week by Angus Reid Public Opinion. That compares with the 64 percent support enjoyed by Saskatchewan’s leader Brad Wall -- 23 points more than any other premier.
Saskatchewan’s bonds have returned 5.1 percent in the past 12 months including reinvested interest, compared with 4.5 percent for Alberta. Both provinces have AAA long-term debt ratings from Standard & Poor’s, with Moody’s Investors Service rating Alberta Aaa and Saskatchewan Aa1.
“What we have going for us is that we aren’t just oil; we are fuel, fertilizer and food,” Wall, 47, said in an interview in his legislative office, which features a bookshelf topped with a row of football helmets, a nod to one of the region’s favorite sports.
Wall credits Saskatchewan’s farmers with heeding Carney’s call to export to faster-growing emerging markets rather than the U.S., by moving from the wheat depicted on the provincial flag to crops such as lentils for India and Bangladesh.
Investments beyond resource companies include Canadian Pacific Railway Ltd.’s hub in Regina that opened in January to transfer freight between trucks and trains. Loblaw Cos. Ltd., the nation’s biggest grocery chain, opened a distribution center nearby, close to a new trucking depot run by the Yanke Group of Companies.
As in North Dakota, the prosperity is leading to a fierce demand for labor.
“Anybody who wants to work in Saskatchewan is working,” said Don Henry, chief operating officer of Morris Industries Ltd. in Saskatoon, a maker of farm equipment such as seeders and bale carriers. “We are constantly looking at resumes.”
And as in North Dakota, the growth is causing stresses. In Estevan, near the U.S. border, utility SaskPower is offering to rent houses within 100 kilometers as it brings in workers to its Boundary Dam station.
High-paid workers are pinched by hotel rooms going for about C$3,300 a month, more than the median rent on a Manhattan apartment.
Still, ex-banker Dales said from an oil battery site in Heward, Saskatchewan, that his quality of life has improved since starting with Calgary-based PetroBakken.
“It was always something I wanted to get into but I found it difficult to find an oil company that was willing to take a chance on someone who was green,” he said. “I go to sleep happy every night.”
Even learning since he started in September to cope with winter blizzards that trap vehicles and wind chills that were 20 degrees below freezing even in March has been fun, he said.
“You never know how hard some of the snowdrifts are,” he said. “It was scary the first couple of weeks but I’ve never looked back on my banking career.”