CAPP forecasts $2bn increase in oil & gas investment
10 February 2020
Capital spending in the oil and natural gas industry is expected to be about USD 2bn higher in 2020 compared to last year. This represents a four per cent increase in capital investment in the conventional side, and an eight per cent increase in the oil sands, according to the Canadian Association of Petroleum Producers (CAPP). Conventional oil and natural gas capital investment for 2020 is forecast at USD 25.4bn, up from an estimated USD 24.4bn last year. Capital investment in the oil sands is forecast at USD 11.6bn in 2020, up from an estimated USD 10.7bn in 2019. This marks the first time in five years that oil sands capital spending is expected to experience an upswing.
Overall for the oil and natural gas sector, total capital investment this year is forecast at USD 37bn, up from an estimated USD 35.1bn in 2019, for a combined increase of 6% in 2020. This would halt the dramatic decline seen since 2014, when investment numbers reached USD 81bn. The extra USD 2bn in capital spending creates or sustains about 11,800 direct and indirect jobs across Canada (approximately 8,100 in Alberta, and 3,700 in the rest of the country).
In addition to more competitive fiscal policies in key provinces, oil producers are cautiously optimistic that additional pipeline capacity is on the way. With the Line 3 project scheduled to come on stream in late 2020, the Trans Mountain Expansion underway, and pre-construction activities ongoing for Keystone XL, there is potential for medium and long-term production growth with access to global markets and expanded transport capacity into the United States.