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That's because the area is currently envisioned as the place where 1,300 megawatts of power-production capacity will be added to Alberta's grid by a series of high-tech wind-power developments - everything from Shell's massive 775-megawatt project ov

That's because the area is currently envisioned as the place where 1,300 megawatts of power-production capacity will be added to Alberta's grid by a series of high-tech wind-power developments - everything from Shell's massive 775-megawatt project over four counties to NaturEner's two Wild Rose projects south and southeast of the city with 400 megawatts of capacity.

Of course power production requires new transmission lines the same way oilpatch development needs new pipelines, and that means large-scale wind farms in southeast Alberta are still dependent on the winds of regulatory approvals, and subsequent transmission-line construction by AltaLink, the province's largest electricity transmitter.

Its plans for Medicine Hat and area include two new high-voltage lines that total 110 kilometres in length northeast and southeast of the Gas City, as well as other major upgrades to the southern Alberta network.

"We have a lot riding on AltaLink's success," sums up Caroline Grover, executive director of the Economic Development Alliance of Southeast Alberta.

That's no understatement.

Wind power

While wind is something more normally associated with the chinooks of southwest Alberta from Crowsnest Pass to Lethbridge, almost half of the 2,700 megawatts of wind-farm capacity now planned is in Alberta's southeast, meaning major economic spinoffs will come to the region traditionally known for natural-gas production and industries that dovetail with the availability of cheap, plentiful gas.

"We're optimistic that within a year AltaLink will have the approvals they need," said Grover.

Once those approvals are granted, hundreds of new jobs will follow in the construction, operations and maintenance sector for the industry.

"These wind farms will be the largest in Canada," Grover noted.

It will be a big boost for a city and region that felt the sting of a decline in natural-gas prices and drilling a few years ago.

Oil and gas

Now, with wind-and-solar-power development looming on the horizon (the City of Medicine Hat has already embraced solar power with tax incentives), things have been picking up in the local oil and gas sector as well, according to Grover. The number of help-wanted ads has been growing, and petro-chemical producer Methanex Corp. is actually looking at reactivating its mothballed Medicine Hat methanol plant, which closed in 2002.

"If we were operating the plant today, we could recover the capital required to restart the plant in about 12 months," said Jason Chesko, the company's director of investor relations.

But he cautioned that gas prices today may not stay around, and the company, while it's doing work now to allow for restarting the plant in mid-2011, hasn't made a final decision on its plans, thanks largely to the fact it hasn't secured a long-term gas deal for the Gas City.

"The forward market for gas in Alberta is more expensive, and makes the economics the challenge," Chesko said.


While the sweet gas of southeast Alberta may cost more in 2011 and 2012, another gas-dependent agricultural sector continues to grow, so much so that it's looking for some rule changes, explained Grover.

The region's greenhouse operators are looking beyond the federal government's Temporary Foreign Workers Program to give them better access to long-term employees from the world's hotter regions who can bring their skills, work ethic and heat tolerance to the hothouse capital of Western Canada.

Red Hat Co-operative Ltd. includes 50 greenhouse operators in the Medicine Hat/Redcliff area, and they now package their produce in a new 55,000-square-foot warehouse. They distribute their produce in Canada and the United States under the Red Hat name, and have increased production significantly, with more growth potential ahead.

"That's one industry that's poised for significant growth," Grover said of the greenhouse sector, adding it could produce a few hundred new jobs if there's a sustainable flow of new workers.

The agri-food and agriculture-processing businesses have remained steady in southern Alberta for the most part, but how they do in 2010 will depend somewhat on a long, dry and warm fall, thanks to crops delayed by a cool, wet June.

Farms in southwest Saskatchewan were more severely affected than those closer to Medicine Hat, in most cases, but that will still affect the farm-supply sector, which won't be moving as much equipment from its lots this year, thanks to the flooding setback and reduced farm cash flows.

Building permits

Development-wise, 2009 and early 2010 were neither strong nor horrible for the 'Hat.

City building-permit values for 2009 dropped to $93.2 million, down from $108.4 million in 2008. New-home construction fell from 376 to 138 units.

On the bright side, new-home starts for the first half of 2010 hit 114, more than double the 53 for the same period in the first half of 2009.

As well, the province recently committed to a $200 million plan to upgrade and expand the city's regional hospital. That project will create a construction boom when it's in full steam in 2012.

The average selling price for residential property sold in Medicine Hat in June 2010 was just over $241,000, according to the Medicine Hat Real Estate Board.

Commercial lease rates in the city vary significantly as they have in the past, with downtown rates usually well below the $30 and higher per-square-foot rates that accompany newer development in highway commercial corridors in the city's popular southeast sector.

The city continues to chase downtown revitalization, and its initial focus is on the 600 block of Second Street SE, which planners envision as a site for trendy restaurants, art galleries, coffee shops and a greater pedestrian focus.


Progess has also been seen in industries such as defence contracting and training, helped in part by the city's proximity to Canadian Forces Base Suffield, which prepares British and Canadian troops for duty in Afghanistan. Normally the arid semi-desert resembles the terrain of the battle zone halfway around the world. This year it has just been much greener - perhaps a harbinger of the direction the local economy is heading in.

from Western Investor, September 2010


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