Canada got a piece of good news from its oil and gas industry on Thursday, with an increase in capital spending this year expected to support 11,800 jobs across the country.
The Canadian Association of Petroleum Producers (CAPP) now expects total capital spending of $37 billion in 2020. That’s up six percent, or about $2 billion, from last year.
The Petroleum Services Association of Canada (PSAC) also increased its drilling forecast for 2020, adding 300 wells in Alberta compared to its original forecast in October. PSAC now expects 4,800 wells to be drilled across Canada this year, down from 5,000 in 2019.
CAPP expects the increase in activity will “create or sustain” 8,100 direct and indirect jobs in Alberta and 3,700 across Canada.
Including indirect employment, the Government of Alberta estimates the province’s energy sector provides 533,000 jobs across the country.
CAPP attributes the spending and jobs increase in part to “a more competitive economic environment” in Alberta thanks to tax cuts and relaxed curtailment quotas, as well as the ongoing “efficient and effective” regulatory environment in Saskatchewan.
Oil producers are also cautiously optimistic that additional pipeline capacity is on the way, CAPP said, with the Enbridge Line 3 project scheduled to come on stream in late 2020, the Trans Mountain Expansion underway and pre-construction activities ongoing for the Keystone XL pipeline.
“Investors are seeing some positive activity in the industry right now, and it’s important that all levels of government show a commitment to Canada’s energy industry and the hundreds of thousands of Canadians who work in the industry,” CAPP president Tim McMillan said in a statement.
“We need policies and action that keep us moving ahead – making us competitive, completing projects, and getting Canada’s responsibly produced energy to global markets.”
Meanwhile, PSAC CEO Gary Mar cautioned that although many drilling and service companies have experienced a stronger start to 2020, this is likely due primarily to work deferred from the fourth quarter of 2019 and will not translate into increased activity for the rest of the year.
Mar said pipeline development will be key to a sustained increase in Canadian oil and gas activity.
“We absolutely must find a way to get our responsibly developed resources to global markets to help lower GHG emissions by replacing coal and through innovation and technology, while creating jobs and prosperity for all Canadians,” he said.
“There simply is no good reason to do otherwise.”