CALGARY -- The Canadian Association of Petroleum Producers is predicting the ongoing downward trend of investment in the energy sector will end this year and stabilize.
CAPP is forecasting a 14 per cent increase in upstream gas and oil investment, with expectations of $27.3 billion in investment compared to the $24 billion experienced in 2020.
The 2021 forecast remains a significant departure from the numbers of 2014 when investment was $81 billion.
"It is a positive sign to see capital investment numbers moving up from the record lows of 2020," said Tim McMillan, CAPP president and CEO, 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."
According to CAPP, the additional spending will be primarily focused in Alberta and British Columbia and represents "a stabilizing of industry investment and the beginning of a longer-term economic recovery."
Upstream investment in Alberta is expected to increase to $11.8 billion this year, an 18 per cent increase over the $10 billion invested 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," said McMillan. "With some hard work, we can build momentum from this positive news, and position Canada for success as economies around the world recover."
Alberta Energy Minister Sonya Savage called the forecast encouraging and says it speaks to "the ongoing resilience of Canada's energy industry and its confidence in Alberta's investment climate."
"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," said Savage in a statement released Wednesday. "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.
"We have more work ahead of us, but this is a great way to start 2021 and further demonstrates the importance of Alberta’s oil and gas reserves in meeting post-pandemic demand."
CAPP forecasts the drilling of 3,300 new wells in Canada this year — an increase over the 3,000 wells drilled in 2020, but a significant decline from the 4,250 drilled in 2019.
The 2021 investment forecast released Wednesday falls far short of the $37 billion investment prediction for 2021 released by CAPP at the beginning of 2020. CAPP attributes the forecast adjustment to the crude oil price war between Russia and Saudi Arabia in March 2020 as well as "an unprecedented 31 per cent drop in investment" as a result of the COVID-19 pandemic.
CAPP expects global demand for Canadian natural gas and oil to grow, citing the International Energy Agency's projection that oil demand will increase five per cent by 2030 and six per cent by 2040 to 104 million barrels per day. Natural gas is predicted to increase 15 per cent by 2030 and 30 per cent by 2040 to 5,221 billion cubic metres.
