CALGARY (660 NEWS) – It’s something we haven’t heard of for quite some time: optimism about the oil and gas industry.
A new report from the Canadian Association of Petroleum Producers (CAPP) released Wednesday shows improvement in the sector when it comes to spending and investment.
The report forecasts a 14 per cent increase in upstream natural gas and oil investment in 2021 and that capital spending is expected to be around $3.36 billion higher this year.
Capital investment in the oil sands is forecast to hit $7.3 billion this year up from an estimated $6.7 billion total in 2020.
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“Global demand continues to grow, gas prices are also way up. The AECO price, which is the standard Alberta price for gas is at $2.60, $2.70 right now,” said Premier Jason Kenney.
In Alberta, investment in oil and gas is expected to increase 18-per-cent to a total of $11.8 billion.
CAPP also forecasts about 3,300 new wells to be drilled in Canada this year that’s up from 3,000 drilled in 2020 but lower than the 4,250 drilled in 2019.
Some optimism in #Alberta's oil & gas industry this morning. @OilGasCanada releases a report showing a 14% increase in upstream natural gas & oil investment in 2021. Capital spending will hit $27.3B. Capital investment in oil sands is forecasted to hit $7.3B this year. #yyc #yeg pic.twitter.com/Lta8Kz4j40
— Saif Kaisar (@StaySaif) January 13, 2021
Last year, the provincial government announced tax relief for companies drilling new wells and $1.5 billion to support the Keystone XL pipeline project.
“It is a positive sign to see capital investment numbers moving up from the record lows of 2020,” said CEO of CAPP Tim McMillan. “This can be read as the start of what we expect will be a long road to economic recovery for the natural gas and oil industry and the Canadian economy as a whole.”
“We’ve also seen a significant uptick in drilling activity and the oilsands are producing more than they ever have in history when this spring we thought that we were looking at potential ‘oilmageddon’ in the patch because of the Saudi-Russia price war,” added Kenney.
Meanwhile, Alberta’s Energy Minister, Sonya Savage welcomed the positive report saying the oil and gas industry has suffered tremendously in the past year.
“Today’s news mirrors the considerable optimism we have recently seen in Alberta through increased drilling, rig counts and upstream development – all of which will drive jobs, revenues and further investment in our province. We have more work ahead of us, but this is a great way to start 2021 and further demonstrates the importance of Alberta’s oil and gas reserves in meeting post-pandemic demand.”
Today’s news from CAPP mirrors the considerable optimism we have recently seen in Alberta.
This is a great way to start 2021 and further demonstrates the importance of Alberta’s oil and gas reserves in meeting post-pandemic demand.
My full statement: https://t.co/wyUbqxpWyI
— Sonya Savage (@sonyasavage) January 13, 2021
Savage added the UCP government will do what it can to help boost investment and development in the resource sector.
To date, the Alberta government has reduced corporate taxes and launched a $1-billion Site Rehabilitation Program to help the struggling oil industry rebound.
This news comes as the price for Western Canadian Selected (WCS) hit its highest since last February at close to $40 a barrel.
The price for Liquefied Natural Gas (LNG) has also seen a rise due to a cold winter so far in Asia.