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Oil and gas industry forecasts small spending rise after slashed budgets in 2020

Last Updated Jan 13, 2021 at 10:56 am EDT

Pumpjacks draw oil out of the ground near Olds, Alta., Thursday, July 16, 2020. THE CANADIAN PRESS/Jeff McIntosh

CALGARY — The Canadian Association of Petroleum Producers says it expects a $3.36-billion rebound in oilpatch capital spending in Canada in this year compared with the restrained spending of 2020.

The association says the 14 per cent increase in its members’ spending intentions to about $27.3 billion this year compares with total investment of about $24 billion in 2020.

In June, CAPP estimated 2020 spending would be $23.3 billion, a downward revision from its January 2019 forecast of about $37 billion, thanks to cuts to cope with lower oil prices from an international price war and lower demand due to measures taken to control the COVID-19 pandemic.

Spending in the sector has been trending lower since 2014 when investment reached $81 billion.

Most of the additional spending this year is forecast for Alberta and British Columbia, while numbers in Saskatchewan show modest improvement and offshore investment in Atlantic Canada is expected to remain stable compared with 2020.

CAPP estimates conventional oil and natural gas capital spending will be $20 billion, up from an estimated $17.2 billion last year, while spending in the oilsands will grow to $7.3 billion, up from $6.7 billion.

“It is a positive sign to see capital investment numbers moving up from the record lows of 2020,” said CAPP CEO Tim McMillan in a statement.

“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.”

CAPP forecasts 3,300 new wells will be drilled in Canada in 2021, up from 3,000 drilled in 2020 but much lower than the 4,250 drilled in 2019.

This report by The Canadian Press was first published Jan. 13, 2021.

The Canadian Press