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


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CALGARY — A forecast calling for a modest increase in capital spending in the Canadian oilpatch this year after a tumultuous 2020 of budget slashing is being hailed as a sign of better times ahead for the industry.

Capital spending by oil and gas companies in Canada in this year is expected to rise by $3.36 billion compared with 2020, the Canadian Association of Petroleum Producers said Wednesday.

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

“”A more than three-billion-dollar increase in planned upstream natural gas and oil spending signals that producers are invested in Canada’s economic recovery,” CAPP CEO Tim McMillan said in a statement.

“With some hard work, we can build momentum from this positive news, and position Canada for success as economies around the world recover.”

In June, CAPP estimated 2020 spending would be $23.3 billion, a downward revision from its January 2020 forecast of about $37 billion, thanks to budget 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.

“We recognize that this past year has been difficult for so many in our industry, with companies needing to find efficiencies and realign their operations,” Alberta Energy Minister Sonya Savage said in a statement.

“However, today’s news mirrors the considerable optimism we have recently seen in Alberta through increased drilling, rig counts and upstream development — all of which will drive jobs, revenues and further investment in our province.”

Alberta produces about 65 per cent of Canada’s natural gas and 82 per cent of its oil.

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.

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.

Dan Healing, The Canadian Press

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Indigenous business coalition leader says Keystone XL denial will hurt communities

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CALGARY — The leader of a group promoting Indigenous participation in oil and gas development as a solution to poverty on reserves says the cancellation of the Keystone XL pipeline by U.S. President Joe Biden is a major setback.

Dale Swampy, president of the National Coalition of Chiefs, says the decision means fewer jobs in the short term for Indigenous people in constructing the pipeline and supplying goods and services for it.

He adds it also implies more long-term unemployment for those who work in exploring and developing conventional and oilsands projects in Western Canada because it impedes investment in production growth.

The end of the pipeline means Natural Law Energy, which represents five First Nations in Alberta and Saskatchewan, will no longer be able to make an equity investment of up to $1 billion in Keystone XL, as well as a plan by builder TC Energy Corp. to make similar deals with American Indigenous groups.

But Swampy, a member of the Samson Cree Nation in central Alberta, points out that the impact on Indigenous people goes beyond that, noting that four of his five sons work in oil and gas but one of them has been unable to find a job in the current downturn.

In a report published in December, energy industry labour data firm PetroLMI said about 13,800 self-identified Indigenous people were directly employed in Canada’s oil and gas industry in 2019. That’s just over seven per cent of total industry employment, compared to three per cent in other industries.

“It’s quite a blow to the First Nations that are involved right now in working with TC Energy to access employment training and contracting opportunities,” said Swampy.

“Within Alberta, First Nations are pretty closely entrenched with all of the activities occurring with the oil and gas industry. Any change, especially a big change like this, really affects our bands’ ability to keep our people employed.”

Swampy is a former CEO of the Samson band. The coalition he heads was created in 2017 by Indigenous equity partners in the cancelled Northern Gateway pipeline and has a membership of about 80 bands.

This report by The Canadian Press was first published Jan. 22, 2021.

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The Canadian Press

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Alberta premier wants direct compensation from U.S. if Keystone XL pipeline dead

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Alberta Premier Jason Kenney is making another demand of Justin Trudeau over the Keystone XL pipeline ahead of the prime minister’s  call today with new U.S. President Joe Biden.

In a letter to Trudeau, Kenney reiterates that the prime minister must press for a meeting with Biden so that Canada can make its case for the pipeline, which Biden cancelled this week on his first day in office.

Kenney also repeats that if that fails, Trudeau must take retaliatory measures such as trade sanctions.

But he also asks that Trudeau press Biden for direct compensation.

Kenney says Alberta and pipeline builder TC Energy Corp. invested in the project believing it was going ahead under stable review and governance.

The premier committed $1.5 billon to the project last year, with another $6 billion in loan guarantees.

Biden made it clear last spring that he would cancel the Keystone line if he became president. He said that shipping more product from Alberta’s oilsands did not mesh with his broader objective of battling climate change.

The Keystone line would have taken more Alberta oil to refineries and ports in the United States to relieve a North American bottleneck that has led to discounts and sometimes sharp reductions in the price of Alberta’s oil.

In the letter dated Thursday, Kenney says the Keystone project that Biden once rejected is now a different, more environmentally friendly undertaking.

“Keystone XL will be the first pipeline of its kind to operate at net-zero emissions on its first day of operations and will purchase 100 per cent of its power load from renewable energy sources,” Kenney writes.

“I propose that we approach Washington together to begin a conversation about North American energy and climate policy.”

If that doesn’t happen, he is pushing for “proportionate economic consequences.”

“At the very least, I call upon the government of Canada to press the U.S. administration to compensate TC Energy and the government of Alberta for billions of dollars of costs incurred in the construction of Keystone XL to date.

“These costs were incurred on the assumption that the United States had a predictable regulatory framework and based on the presidential permit authorizing the Keystone XL border crossing, which was installed in the summer of 2019.”

This report by The Canadian Press was first published Jan. 22, 2021.


Dean Bennett, The Canadian Press

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january, 2021

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