Economists predict $7.1 billion in '11 construction 2011: Increase is 4 percent over last year; health, oil, gas, government lead way.

Two University of Alaska Anchorage economists are forecasting that construction spending statewide this year will grow 4 percent, to $7.1 billion.

Leading the way will be health care, utilities and education projects, said Scott Goldsmith and Mary Killorin with the UAA Institute of Social and Economic Research. They did their annual forecast for Associated General Contractors of Alaska, a trade group for contractors.

Construction spending for other purposes will be flat or down this year, Goldsmith and Killorin said.

They break down the spending this way:

• Oil and gas -- $2.91 billion, up 3 percent.

• Other private spending -- $1.55 billion, up 13 percent.

• Government projects -- $2.66 billion, up 1 percent.

They said new or expanded hospitals and clinics in both urban and rural areas are driving growth in the health care spending. They see $305 million in construction within this category, up 38 percent.

Providence Alaska will be modernizing and enlarging its newborn intensive care and maternity suites, and expanding its cardiac surgery capacity, they said. New hospitals also account for the increase, with continuing construction in Nome and Barrow, and a new medical center starting in Fairbanks, they said.

Utility construction spending is forecast at $615 million, up 28 percent. Two big drivers here are development of new electric-generating capacity in the state's Railbelt and expansion of rural telecommunications networks.

Education is projected at $355 million, up 25 percent. The state schools bond passed last year will fund projects throughout the state and university buildings in Anchorage, Mat-Su and Fairbanks.

The oil and gas industry's $2.9 billion accounts for 41 percent of all the expected construction, Goldsmith and Killoran said. This projection is squishy, however, they said. It depends on the expected projects actually happening. What's expected:

• BP continues to develop its new Liberty oil field in the Beaufort Sea.

• Conoco Phillips develops its Alpine West prospect in the National Petroleum Reserve-Alaska.

• Eni starts production from and continues development of its Nikaitchuq oil field in the Beaufort.

• Pioneer Natural Resources continues expanding its Oooguruk field next to Nikaitchuq.

• Shell gets to drill its controversial exploratory wells in the Beaufort.

Beyond these highlights, the two economists foresee less construction spending this year on commercial buildings, housing, roads, airports and ports, although collectively they expect $1.2 billion in construction within these realms.

Defense projects should total $555 million, up 1 percent. This will include hangars, housing, training facilities and utility upgrades in Anchorage and Fairbanks, they said.

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