New forecasts show dramatically lower expectations for 2020 capital spending in the oil and gas sector both nationally and in Alberta, the province that produces 65% of the country’s natural gas and 82% of its oil.
The Canadian Association of Petroleum Producers now estimates that $23.3 billion will be spent in the oil and gas production sector in Canada this year, down from about $37 billion in its January forecast.
Producers have announced billions of dollars in budget cuts since the start of the year to cope with lower oil prices as global energy demand plummets due to measures taken to control the COVID-19 pandemic.
Its January prediction represented about a 6% increase over 2019, credited to new industry friendly policies in Alberta and Saskatchewan and growing optimism that export pipeline capacity would be added.
The Alberta Energy Regulator, meanwhile, estimates that oil and gas capital spending in the province this year will fall to between $14.1 billion and $16.4 billion as price uncertainties continue to hurt producer confidence.
In its energy outlook posted Monday, the regulator says capital spending fell by 31% in 2019 to $18.9 billion. It attributed the 2019 drop to uncertainties around energy policy, low energy prices and market access constraints.