When the bottom fell out of oil prices in 2014, Medicine Hat’s reliance on the oil & gas industry was exposed. Service companies closed their Medicine Hat operations and the city’s 2015 GDP saw a 4.2% contraction from the year before. The contraction highlighted a need for Medicine Hat to diversify, and city leaders took action.
A Conference Board of Canada report analyzing small cities suggests that Medicine Hat’s recovery is thanks in part to a diversifying agricultural sector. It points to the Medicine Hat region’s hemp production, which is a provincial leader, as a growth opportunity.
The city’s natural gas reserves are also drawing interest, as petrochemical companies are seriously looking at Medicine Hat as a potential location. As the United States continues their own natural gas production, prices have fallen and are expected to remain low for the foreseeable future. Competition is fierce in this sector, but Medicine Hat has a unique value proposition that has caught the attention of industry.
Both the Wind and Solar energy industries are flocking to Alberta, and Medicine Hat is fielding as many calls as it can handle. There are currently over 3,000 megawatts of wind and solar power proposed for Southeast Alberta, which has some of the best resources in the country. Once contracts are awarded following an initial 400 megawatt RFP in January 2017, Medicine Hat will be well-positioned for construction and operations positions.
Oil prices are expected to stabilize in the $50-$55 per barrel range, which is enough to support modest investment and growth in 2017. Medicine Hat industrial real estate leases have seen an uptick in the fourth quarter of 2016, suggesting that work is slowly returning to the area.
The Conference Board of Canada anticipates 1.8% GDP growth for Medicine Hat in 2017, which is welcome news following two years of contraction.
Buoyed by stabilizing oil prices, Medicine Hat has put itself in a position for long-term growth by opening its doors to complementary industries and highlighting its strengths as a community and region.