Canadian oil and natural gas producers will spend an estimated C$40.6 billion ($30.07 billion) on capital projects this year, up slightly from C$39 billion last year, the Canadian Association of Petroleum Producers (CAPP) said on Tuesday.
Producers are staying disciplined with spending even as Canadian oil production is at record-high levels ahead of the expected completion of the Trans Mountain oil pipeline expansion in the second quarter, CAPP CEO Lisa Baiton said.
WHY IT'S IMPORTANT
Canada, the fourth-largest global oil producer, has steadily raised production to take advantage of expanding pipeline capacity even as OPEC and the wider OPEC+ alliance have implemented a series of output cuts since late 2022 to support prices.
CONTEXT
Canada's congested oil pipelines and lack of export capacity for liquefied natural gas (LNG) have long limited expansion of crude and gas production. The Canadian government-owned Trans Mountain expansion has been dogged by cost over-runs and construction problems, but will nearly triple the flow of oil on that pipeline from Alberta to the Pacific coast, where it can be shipped to refineries on the U.S. West Coast and in Asia.
Shell-led LNG Canada is finishing work on the country's first major LNG export facility, which will boost demand for Canada's gas when it starts operation, possibly within the next year.
KEY QUOTE
"Despite these positive trends there remains a sense of caution largely due to the ongoing uncertainty surrounding proposed emissions policy in Canada," Baiton said.
BY THE NUMBERS
CAPP estimates conventional oil and gas capital spending at C$27.3 billion in 2024, with oil sands spending pegged at C$13.3 billion.
Spending in Alberta, Canada's main oil producing province, looks to remain steady at C$29 billion, with small increases expected in Saskatchewan, British Columbia and Newfoundland and Labrador, CAPP said.
($1 = 1.3502 Canadian dollars)
