Led by Alberta, Canadian upstream oil and gas capital expenditures (capex) is set to surpass pre-COVID levels in 2023 to $40 billion according to Canadian Association of Petroleum Producers (CAPP), the country’s largest industry association..The good news is that it’s nearly double levels recorded in the pandemic. Capital spending by oil companies is a bellwether indicator of the overall economic health of the industry and leading indicator of future growth. It’s much better — from a provincial economic perspective — to have that cash plowed back into the ground than siphoned off in the form of dividends and buybacks..The bad news is that it’s barely half the 2015 peak of $80 billion, according to historical data from Statistics Canada. And barely a fraction of the $7 trillion in global spending expected over the next decade, according to a new fact sheet by the Canadian Energy Centre.. Historical Canadian oil and gas spendingAlthough it is expected to double from 2020 levels Canadian oil and gas spending in 2023 will still be half of its 2015 peak. .In a statement, CAPP said expected 2023 capex levels are about 11% or $4 billion higher than last year, up more than 80% over $22 billion in 2020 and marks the third straight year of growth. Conventional oil and natural gas investment is expected to account for $28.5 billion, while oil sands investment is expected to reach $11.5 billion..In addition, CAPP noted the oilpatch is the largest investor in environmental protection, spending over $3 billion annually in areas such as biodiversity habitat protection, air quality management and water protection..“The year 2023 may be one of the most pivotal moments in time for Canada’s oil and natural gas industry. With an emerging liquefied natural gas export industry, the expected completion of the Trans Mountain pipeline expansion, and billions of dollars in emissions reduction investments waiting to be unlocked, Canada is positioned to play a much larger role in providing responsibly produced energy resources to the world,” CAPP CEO Lisa Baiton said in a statement..Alberta is expected to account for 70% of all upstream oil and natural gas investment nationally, driven both in the conventional and oil sands sectors. British Columbia is expected to grow by about $1 billion, reaching a total of $7.2 billion, while Saskatchewan stays flat at $2.7 billion. .In Newfoundland and Labrador, offshore investment is expected to remain relatively flat at $1.3 billion in 2023 although that number is expected to pick up in 2024 with the federal government’s environmental approval of the Bay du Nord prospect as well as the announced restart of the West White Rose project. However, CAPP notes that offshore investment is not growing at the same pace as the broader global offshore industry, although Canada’s offshore holds significant potential with some of the lowest emission oil in the world as well as its proximity to global markets. .The Canadian numbers are also a fraction of the nearly-trillion dollar global industry, according to the latest CEC numbers. According to its most recent fact sheet, global spending is expected to come in at $923.1 billion US in 2023, rising to $931.3 billion by 2025, before declining gradually to $866.4 billion 2030. .In all, some $7.1 trillion is expected to be spent in the world’s oilfields by 2030. Cumulative spending on liquified natural gas and regasification is expected to be over $385 billion through 2030, according to data provided by Rystad Energy, an independent energy research company..However, the International Energy Agency notes the global industry is facing the same inflationary pressures experienced by other sectors. According to its 2022 World Energy Investment report, almost half of the additional $200 billion in capital investment last year was eaten up by higher costs rather than bringing on additional energy supply capacity, “due to multiple supply chain pressures, tight markets for specialized labour and services, and the effect of higher energy prices on essential construction materials like steel and cement.”
