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By Canadian Press

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

Jan 14, 2021 | 2:58 PM

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.

“Adding $3 billion to the Canadian economy, it’s a big number and it’s meaningful even in a national economy type of metric,” said CAPP CEO Tim McMillan in an interview.

“That being said, we’re not happy with that level. We think that with the big global demand increases we’ve seen over the last several years, pre-COVID, and the way demand has rebounded since the first wave of lockdowns, there is more potential for Canada in the years ahead.”

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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.

This report by The Canadian Press was first published Jan. 14, 2021.

The Canadian Press