Chris Biasutti of Western Canadian Properties Group Discusses: “LNG to Increase Demand in an Already Under supplied Housing Market”.
Here’s the transcript in case you missed it:
Even before all this stuff happened but even more so today, there is a very strong demand for new housing. In fact there is just a strong demand for housing in general right now. Which Trevor Bolin will talk about. They don’t have nearly enough homes but 71% of the dwellings in Fort St. John were constructed prior to 1986. So this is a photo of a house I took up there. That is what you can go and rent or buy. The majority; 71% of the market looks like that.
So today, they expect we need 5,500 new housing units. And that’s without Sightsee Dam. This was before they announced Sightsee that we need in the region 5,500 new housing units. Then they announced Sightsee and Trevor Bolin can talk about what he thinks that is going to do to already undersupplied market up there. It’s just made the problem even that much worse.
So today they need 5,500 units. The median age is 29. That’s the average age. The average income is $108,000 a year in Fort St. John today. So I ask myself and I ask everybody: “do you think if you were that person (try and put yourself in their shoes), would you rent that, or buy that. (Anybody? No?) Or would you rather rent or buy that!?” Yes? Or we would just rather not move there? *laughter*
So, that’s one of our town-homes that we build in the region. And the reality is the people are willing to pay a premium to move into that because they are making so much money. The generation “Y” is the generation of entitlement. They want now. They’re not willing to save and wait, they want it now. I know, because that’s my generation. So the population with Sightsee dam, the population without Sightsee was expected to go from 64,000 to 123,000 people. Then they announced Sightsee dam. So nobody really has any idea anymore what’s going to happen. It’s kind of throw the ball in the air and let’s see where it lands.
That’s where we are at today in the region. Then there’s been a number of news articles recently. And I want to touch on this oil price thing and what’s happening.
“Vancouver-based New Times Energy latest entrant into crowded LNG space.” So there’s over 19 of these LNG Projects that are announced now.
Here is another article: “Exxon Mobile could begin construction of B.C LNG facility as early as 2017”. Exxon would be the largest plant that’s announced to date. Create over 6,000 jobs and be worth over $25B.
“Petronas is going to hire hundreds of skilled foreign workers for B.C LNG Project”. They spent $2B on drilling in North East BC in 2013. $2.5B in 2014. And they’re expected to spend $2.5B this year.
“Encana wants to spend $600m in Montney this year”. This guy, good looking guy, he is the BP chief executive officer, his name is Bob, Bob Dudley. “Natural Gas to become the most important source of power in the next decade!”
And this is literally two days ago, the Prime Minister, he went out and said: “you know what, LNG guys, we are going to do something good for you, we’re going to increase your Capital Cost Allowance” which basically reduces the tax they have to pay. They can write off their facilities quicker. This came out two days ago. This was huge.
So what does all of this stuff mean? To get back, for those of you who haven’t heard the story before or to get back to the basics of the story; there is a major gas supply shortage around the world right now in Asia. Basically everywhere except for North America. There is a bit of a gas supply, North America, and Russia, there is a bit of a gas supply shortage. And that’s demonstrated by this graph. You can see what they produce and what they actually need. What they demand.
They need to go find new gas somewhere to power their economies because, remember that earlier slide, where the natural gas percentage of world’s supply is increasing over the next 15 years.