The Canadian Association of Petroleum Producers (CAPP) is forecasting that oil and gas companies will spend $27.3 billion in 2021, up from $24 billion last year.
The increase is due in part to the availability of the COVID-19 vaccine globally, which is expected to spur economic activity and projections of the global economy will return to pre-COVID levels in 2021 by the International Energy Agency.
Data compiled by Evaluate Energy for the Daily Oil Bulletin's guidance report released on Tuesday showed that a basket of Canadian-based companies that have announced 2021 spending plans will have a combined $1.66-billion boost across the 25 companies, representing an increase in 2021 of 13 per cent over currently reported 2020 guidance for the same companies.
Tim McMillan, CAPP president and CEO said it is a positive sign to see capital investment numbers moving up from the record lows of 2020. He said this can be read as the start of what CAPP expects will be a long road to economic recovery for the natural gas and oil industry and the Canadian economy as a whole.
“A more than three billion dollar increase in planned upstream natural gas and oil spending signals that producers are invested in Canada’s economic recovery,” said McMillan. “With some hard work, we can build momentum from this positive news, and position Canada for success as economies around the world recover.”
The additional spending is primarily expected to occur in Alberta and British Columbia, while numbers in Saskatchewan show modest improvement and offshore investment in Atlantic Canada is expected to remain relatively stable compared to 2020, said CAPP.
Other contributing factors to the increase in capital spending are government supports introduced in 2020, including many at the provincial level.
“As one of the largest private investors and employers in the country, the natural gas and oil industry can be a foundation for national economic recovery,” said McMillan. “The industry is committed to working with governments, at all levels, to create an environment where businesses can thrive and attract investment back to Canada. This is how we will maintain jobs and create new opportunities for Canadians.”
- Conventional oil and natural gas capital investment for 2021 is forecast at $20 billion, up from an estimated $17.2 billion last year.
- Capital investment in the oilsands is forecast at $7.3 billion in 2021, up from an estimated $6.7 billion total in 2020.
- In Alberta, upstream investment is expected to increase 18 per cent to total $11.8 billion in 2021 from an estimated $10 billion last year.
- In British Columbia, growth in upstream investment for 2021 is forecast at about 29 per cent; up to $3.9 billion from an estimated $3 billion in 2020.
- In Saskatchewan, 2021 upstream investment is forecast at a five per cent increase, up to $2.8 billion from an estimated $2.7 billion in 2020.
- In Newfoundland and Labrador, offshore investment is expected to remain flat in 2021 at approximately $1.5 billion.