CALGARY, ALTA. – Canada’s Oil & Gas Producers (CAPP) are forecasting capital spending in the oil and natural gas industry will be $2 billion higher in 2020 compared to the previous year.
The forecasted increase represents a four per cent rise on the conventional side and an eight per cent increase in the oil sands.
“We are very happy to see an increase in capital investment expected for 2020. It’s a reflection of the hard work and determination on many fronts to bring the industry into a more competitive position. That includes the corporate tax cut by the Government of Alberta, and incenting crude by rail under curtailment, which is helping to attract business and investment,” CAPP president and CEO Tim McMillan said.
“Investors are seeing some positive activity in the industry right now, and it’s important that all levels of government show a commitment to Canada’s energy industry and the hundreds of thousands of Canadians who work in the industry. We need policies and action that keep us moving ahead – making us competitive, completing projects, and getting Canada’s responsibly produced energy to global markets,” he added.
Conventional oil and natural gas investment for 2020 is forecast at $25.4 billion u from last year’s $24.4 billion, and oil sands capital investment will rise to $11.6 billion in 2020 up from an estimated $10.7 billion in 2019.
The main driver behind the increase is a more competitive economic environment because of several key policies, a CAPP release stated.
“The increase in capital investment is a very positive sign for the upstream sector, and there is a lot more work to be done to keep this momentum. That includes the continued steps being taken, including the Government of Alberta’s red tape reduction panel, as well as necessary work that must happen in terms of municipal tax reform in both Alberta and Saskatchewan to foster fairness and competitiveness,” McMillan said.
The Alberta government introduced the job creation tax cut in 2019, and as of Jan 1. 2020 the province lowered Alberta’s corporate tax rate to ten per cent from 11 per cent, with a planned reduction to eight per cent by 2022.
Alberta also allowed producers to ship more crude by rail under curtailment and allowed new conventional drilling without restriction on production.
The government of Saskatchewan also stated it had a goal of increasing oil production by 25 per cent to 600,000 barrels per day by 2030/ Capital investment in the province is also expected to increase to ten per cent in 2020, going up to $4.4 billion from $4 billion in 2019.
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