Canada to Up Oil and Gas CAPEX to $29.9B in 2024: Industry Group

The Canadian Association of Petroleum Producers (CAPP) has projected capital expenditures for the upstream oil and natural gas sector to increase to $29.9 billion (CAD 40.6 billion) in 2024 from an estimated $28.72 billion (CAD 39 billion) in the previous year.

Conventional oil and natural gas capital investment for 2024 is forecast at $20.10 billion (CAD 27.3 billion), while oil sands investment is expected to reach $9.79 billion (CAD 13.3 billion), the CAPP said.

In Saskatchewan, spending is forecast to rise from $2.21 billion (CAD 3 billion) to $2.43 billion (CAD 3.3 billion) in 2024, with approximately $368.14 million (CAD 500 million) allocated to thermal in-situ projects. Alberta is expected to maintain a steady investment level at $21.35 billion (CAD 29 billion).

In British Columbia, upstream spending is projected to reach $3.68 billion (CAD 5.0 billion) in 2024, a slight increase over estimated actual 2023 spending. Spending on upstream in 2024 is expected to be driven by drilling to supply LNG Canada as the project moves towards its commissioning and start-up phase, the CAPP said in a news release Tuesday.

Meanwhile, investments in offshore Newfoundland and Labrador reached $1.18 billion (CAD 1.6 billion) in 2023 and are expected to increase to $1.47 billion (CAD 2 billion) in 2024, the CAPP said. “Although these investment numbers are lower than in the rest of Canada, capital investment is increasing in Newfoundland and Labrador after several years of little growth. There remains significant potential to grow and increase exports in the future”, the industry group added.

“Upstream oil and natural gas producers are staying disciplined, with capital expenditures expected to remain stable in 2024”, CAPP President and CEO Lisa Baiton said. “There is room for cautious optimism with current Canadian oil production at record levels in anticipation of the Trans Mountain expansion completion in the second quarter. We are also moving closer to seeing the completion of Canada’s first globally significant liquefied natural gas export facility in British Columbia, expected in 2025”.

“Despite these positive trends, there remains a sense of caution largely due to the ongoing uncertainty surrounding [the] proposed emissions policy in Canada, which continues to be a significant factor in investment decisions”, Baiton added.

“Energy production and export is the backbone of the Canadian economy”, she noted. “Hundreds of thousands of Canadians directly and indirectly rely on the industry for work, enabling thousands of families and businesses, including hundreds that are Indigenous owned, to improve their lives and prosperity”.

Canada’s federal government announced the draft framework requiring the oil and gas industry to reduce emissions 35 to 38 percent below 2019 levels by 2030 during COP 28 in December 2023. The CAPP said that the emissions cap “could result in significant curtailments”, effectively making it a cap on production. The governments of Alberta and Saskatchewan echoed the industry group in opposing the proposed regulations.

According to the CAPP, the oil and natural gas industry is among the largest investors in emissions reduction technologies in Canada and investments are expected to accelerate this year to advance emissions reduction projects. The country’s oil and gas sector spends more than any other industry in Canada on environmental protection at CAD 9.4 billion cumulatively from 2018 to 2020, it added.

Canadian conventional natural gas and oil producers lowered their absolute scope 1 carbon dioxide equivalent (CO2e) emissions by 24 percent while growing total production by 21 percent in the past decade, the CAPP said in an earlier report, citing government production and emissions data.

The CAPP is a non-partisan, research-based industry association that advocates on behalf of its member companies, which explore for, develop, and produce oil and natural gas throughout Canada.

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