Report: Canada Oil, Gas Investment To Drop 62% Since 2014
CALGARY, Alberta, April 7 (Reuters) - Capital spending in Canada's oil and gas sector this year is expected to drop 62 percent from 2014, when crude prices started to collapse, according to the Canadian Association of Petroleum Producers, as the global crude rout drags on.
The C$50 billion decline to C$31 billion ($23.62 billion) will be the largest two-year fall since records began in 1947 and highlights how Canada's oil and gas industry has been forced to retrench in the face of a 65 percent drop in crude prices since mid-2014.
2014 was a high point for capital investment in oil and gas, when the industry spent a record C$81 billion.
"Canada needs urgent action to remain an attractive market for oil and gas investment, and to be competitive relative to other oil and natural gas producing jurisdictions," Tim McMillan, CAPP president and chief executive officer, said on Thursday after the report was released.
McMillan said expanding Canada's export pipeline network and developing LNG export facilities should be a national priority to help create economic activity.
However, TransCanada Corp's Keystone XL pipeline to the United States was rejected last year after years of opposition from environmentalists and local landowners, and no company has made a final investment decision about any of the 19 LNG export terminals proposed for Canada's Pacific Coast.
As capital spending plummets, the total number of wells drilled in Western Canada is forecast to drop to 3,500 this year, down 66 percent from the 10,400 wells drilled in 2014.
CAPP said including indirect jobs more than 110,000 people across Canada have been laid off as a result of the oil and gas downturn and the impact was being felt across the country.
"Governments will see revenues from industry's royalty and tax payments reduced further, which could impact their ability to fund public services such as universities, hospitals and roads," McMillan said.
Despite the cut in spending and reduced conventional oil well drilling, Canadian crude production is expected to keep growing this year as new oil sands projects planned before the downturn, such as Canadian Natural Resources Ltd's Horizon expansion, come into operation.
($1 = 1.3124 Canadian dollars)
(Reporting by Nia Williams; Editing by Phil Berlowitz)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.