After one of the most brutal years for the Canadian oilpatch, the Canadian Association of Petroleum Producers (CAPP) is forecasting a 14 per cent increase in upstream natural gas and oil investment in 2021.
However, Saskatchewan is expected to see only a five per cent increase, while Alberta and British Columbia are expected to fare better.
Capital spending nation-wide in the sector is expected to be around $3.36 billion higher this year, reaching $27.3 billion, compared to an estimated total investment of $24 billion in 2020. While that is an improvement over the most dismal year in recent memory, in comparison, in 2014, capital investment peaked at $81 billion, according to CAPP鈥檚 September 2019 Capital Investment and Drilling Forecast Update, whereas last year saw the lowest levels in more than a decade. CAPP said this year鈥檚 forecast represents a stabilizing of industry investment and the beginning of a longer-term economic recovery.
The additional spending is primarily focused 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.
Conventional oil and natural gas capital investment for 2021 is forecast at $20 billion, up from an estimated $17.2 billion last year.聽
Capital investment in the oil sands is forecast at $7.3 billion in 2021, up from an estimated $6.7 billion total in 2020.
鈥淚t is a positive sign to see capital investment numbers moving up from the record lows of 2020. This can be read as the start of what we expect will be a long road to economic recovery for the natural gas and oil industry and the Canadian economy as a whole,鈥� said CAPP president and CEO Tim McMillan.
鈥淎 more than $3 billion increase in planned upstream natural gas and oil spending signals that producers are invested in Canada鈥檚 economic recovery. With some hard work, we can build momentum from this positive news, and position Canada for success as economies around the world recover.鈥�
He added, 鈥淎s 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. 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.鈥�
The expected 2021 increase of investment into the Canadian economy is partly due to the availability of COVID-19 vaccine globally, which should lead to higher economic activity and increased energy demand, CAPP said. The International Energy Agency (IEA) projects the global economy will return to pre-COVID levels in 2021 while global energy demand is expected to reach its record high pre-crisis levels in early 2023. CAPP noted this growth offers significant opportunity for Canadian natural gas and oil producers as their access to global markets expands.聽
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. The Saskatchewan Party government鈥檚 Vision 2030 goal of increasing oil production by 25 per cent to 600,000 barrels per day, along with fiscal incentives that enhance investment attractiveness have laid a solid foundation for the industry, according to CAPP.
The province also implemented a Saskatchewan-wide rebate on electricity bills; a policy which assists companies with liquidity and signals to the investment community that the province is committed to the economic recovery of the business community.
CAPP forecasts 3,300 new wells to be drilled in Canada in 2021, up from 3,000 drilled in 2020 but significantly lower than the 4,250 drilled in 2019.
