Investment in Canadian oil and natural gas will start recovering this year from its 57% collapse driven by weak commodity prices and pipeline project setbacks during 2015-19, predicted the industry’s chief trade association.
A 2020 forecast released Thursday by the Canadian Association of Petroleum Producers (CAPP) estimated collective corporate spending will rise by C$2 billion ($1.5 billion) or 6% to C$37 billion ($27.8 billion).
The anticipated increase would mark a beginning on reviving Canadian oil and gas supply investment toward the 2014 high of C$81 billion ($60.8 billion) from the 2019 low of C$35 billion ($26.2 billion).
CAPP predicted a C$1 billion ($750 million) or 4% increase in 2020 to C$25.4 billion ($19 billion) for investment in Canadian supplies of natural gas, liquid byproducts and light oil. Oilsands expenditures are projected to rise by C$900 million ($675 million) or 8% to C$11.6 billion ($8.7 billion) in 2020.
The investment increases are forecast to be widespread across Canada’s main fossil fuel production jurisdictions: Alberta, British Columbia and Saskatchewan.
CAPP credited the improved investment outlook to a corporate tax cut and regulatory reform by Alberta’s nine-month-old United Conservative Party government, increased railway oil deliveries, and advances by pipeline projects.
“Oil producers are cautiously optimistic that additional pipeline capacity is on the way,” said CAPP. The group’s members account for 80% of Canadian oil and gas production and the sector’s annual sales of about C$101 billion ($75.8 billion).
With Enbridge Inc.’s Line 3 project set to come onstream in late 2020, along with the Trans Mountain Expansion underway and pre-construction activities ongoing for TC Energy Corp.’s 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.”