The Canadian Association of Petroleum Producers (CAPP) is forecasting capital expenditures for the upstream oil and natural gas sector will reach $40.6 billion in 2024, rising slightly from an estimated actual investment of $39 billion for 2023.
Lisa Baiton
“Upstream oil and natural gas producers are staying disciplined, with capital expenditures expected to remain stable in 2024,” said Lisa Baiton, CAPP President & CEO, in a news release on Tuesday.. “There is room for cautious optimism with current Canadian oil production at record levels in anticipation of the Trans Mountain expansion completion in the second quarter. We are also moving closer to seeing the completion of Canada’s first globally significant liquefied natural gas export facility in British Columbia, expected in 2025.
“Despite these positive trends, there remains a sense of caution largely due to the ongoing uncertainty surrounding proposed emissions policy in Canada, which continues to be a significant factor in investment decisions.
“Energy production and export is the backbone of the Canadian economy. Hundreds of thousands of Canadians directly and indirectly rely on the industry for work, enabling thousands of families and businesses, including hundreds that are Indigenous owned, to improve their lives and prosperity.”
The disciplined business approach and modest production growth in recent years has yielded significant returns to the Canadian economy, representing $111 billion in gross domestic product (GDP) and $45 billion in revenues to municipal, provincial, and federal governments, supporting communities, infrastructure, and energy affordability across the country, said CAPP.
“The oil and natural gas industry is among the largest investors in emissions reduction technologies in Canada and investments are expected to accelerate this year to advance emissions reductions projects,” said the organization.
“Emissions from oil and natural gas production peaked in 2015. From 2012 to 2021, the conventional upstream sector lowered CO2 equivalent emissions by 24% while growing production by 21%. The conventional upstream sector has also reduced methane emissions and is on track to exceed the current federal government target of a 40 to 45 percent reduction by 2025. In addition, with anticipated co-funding from governments the country’s six largest oil sands companies expect to invest $24 billion in emissions reduction projects by 2030 and are targeting net zero emissions from operations by 2050.”
CAPP said Canada’s oil and gas sector spends more than any other industry in Canada on environmental protection — $9.4 billion cumulatively from 2018 to 2020 — accounting for 33 per cent of total environmental protection expenditures made by business across Canada.
Conventional oil and natural gas capital investment for 2024 is forecast at $27.3 billion, while oil sands investment is expected to reach $13.3 billion, it added.
Regional Overview of Capital Expenditures, according to CAPP
- Saskatchewan: In Saskatchewan, spending is forecast to rise from $3 billion to $3.3 billion in 2024, with approximately $500 million allocated to thermal in-situ projects.
- Alberta: The province is expected to maintain a steady investment level at $29 billion, with oil sands’ contribution at around $13.3 billion.
- British Columbia: Upstream spending is projected to reach $5.0 billion in 2024, a slight increase over estimated actual 2023 spending. Spending on upstream in 2024 is expected to be driven by drilling to supply LNG Canada as the project moves towards its commissioning and start-up phase.
- Offshore Newfoundland and Labrador: Investments reached $1.6 billion in 2023 and are expected to increase to $2 billion in 2024. Although these investment numbers are lower than in the rest of Canada, capital investment is increasing in Newfoundland and Labrador after several years of little growth. There remains significant potential to grow and increase exports in the future.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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