CALGARY — Spending in the oil and gas sector is expected to rise by about $2 billion this year after five years of declines.
The Canadian Association of Petroleum Producers says it expects about six per cent more will be invested in Canadian upstream energy this year than in 2019, taking to total to about $37 billion, the first increase since 2014 when investment levels reached $81 billion.
It says the “main driver” for the spending jump is an improved economic environment due to provincial government policies, along with growing optimism that new export pipeline capacity will be built.
It lists Alberta’s moves to slash corporate tax rates and ease oil production curtailment levels, as well as Saskatchewan’s regulatory efficiency and recent target to boost oil output by 25 per cent by 2030.
CAPP says non-oilsands oil and natural gas capital investment for 2020 is forecast at $25.4 billion, up four per cent from an estimated $24.4 billion last year.
Oilsands spending is forecast at $11.6 billion in 2020, up eight per cent from an estimated $10.7 billion in 2019.
“The increase in capital investment is a very positive sign for the upstream sector, and there is a lot more work to be done to keep this momentum,” CAPP CEO Tim McMillan said.
“That includes the continued steps being taken, including the government of Alberta’s red tape reduction panel, as well as necessary work that must happen in terms of municipal tax reform in both Alberta and Saskatchewan to foster fairness and competitiveness.”
CAPP estimates the extra $2 billion in capital spending will create or sustain about 11,800 direct and indirect jobs across Canada, with 8,100 in Alberta.
This report by The Canadian Press was first published Jan. 30, 2020.
The Canadian Press