Oil Sands Capital Spending Set for First Gain Since 2014 Crash
Investment in Canada’s oil-sands is forecast to grow for the first time since prices crashed in 2014.
Capital spending in the world’s third-largest crude reserves is projected to rise 8.4% to C$11.6 billion ($8.8 billion) this year, according to the Canadian Association of Petroleum Producers, the industry’s main lobbying group.
The forecast signals a tentative return of optimism to the oil sands, where pipeline bottlenecks and environmental opposition made expansion difficult even after oil prices rebounded in recent years. CAPP attributes the expected gain to tax cuts implemented by Alberta’s new government and an easing of the province’s output limits.
“The increase in capital investment is a very positive sign for the upstream sector, and there is a lot more work to be done to keep this momentum,” CAPP Chief Executive Officer Tim McMillan said in a statement. That work includes Alberta’s plans to reduce red tape, as well as reforms to municipal taxes, he said.
Even with this year’s increase, the industry is still a long way from its headiest days. The projected oil-sands spending for 2020 is about a third of the peak of C$33.9 billion in 2014, according to CAPP figures.
Expenditures for Canada’s oil and natural gas sector as a whole may increase 5.4% to C$37 billion. Outside the oil sands, spending is projected to rise 4.1% to C$25.4 billion.
The additional C$2 billion in capital spending this year will create or sustain about 11,800 direct and indirect jobs across Canada, the organization projected. About 8,100 of those jobs will be in Alberta, which has struggled with elevated unemployment since the 2014 price crash.