The Canadian Association of Petroleum Producers (CAPP) on Feb. 27 forecasted capital expenditures for the country’s upstream oil and natural gas sector will reach $30 billion (CA$40.6 billion) in 2024.
That’s a slight rise from an estimated actual investment of $28.8 billion (CA$39 billion) for 2023.
CAPP President & CEO Lisa Baiton said in a press release that with upstream producers remaining disciplined, capex is expected to remain stable in 2024.
“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,” she said.
Canada’s first globally significant LNG export facility in British Columbia is expected to be complete in 2025, she added.
Emissions reduction investments
Baiton said producers are cautious in the face of “ongoing uncertainty surrounding proposed emissions policy in Canada, which continues to be a significant factor in investment decisions.”
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 projects, according to CAPP.
Emissions from oil and natural gas production peaked in 2015, CAPP said, and from 2012 to 2021, the conventional upstream sector lowered CO2 equivalent emissions by 24% while growing production by 21%.
CAPP said the conventional upstream sector has also reduced methane emissions and is on track to exceed the current Canadian federal government target of a 40% to 45% reduction by 2025. In addition, with anticipated co-funding from governments, the country’s six largest oil sands companies expect to invest $17.7 billion (CA$24 billion) in emissions reduction projects by 2030 and are targeting net zero emissions from operations by 2050.
According to CAPP, Canada’s oil and gas sector spends more than any other industry in Canada on environmental protection, cumulatively investing $6.9 billion (CA$9.4 billion) from 2018 to 2020 and accounting for 33% of total environmental protection expenditures made by business across Canada.
2024 capex forecast
Conventional oil and natural gas capital investment for 2024 is forecast at $20.2 billion (CA$27.3 billion), while oil sands investment is expected to reach $9.8 billion (CA$13.3 billion).
In Saskatchewan, spending is forecast to rise from $2.2 billion (CA$3 billion) to $2.4 billion (CA$3.3 billion) in 2024, with approximately $370 million (CA$500 million) allocated to thermal in-situ projects.
Alberta is expected to maintain a steady investment level at $21.4 billion (CA$29 billion), with oil sands’ contribution at around $9.8 billion (CA$13.3 billion).
In British Columbia, upstream spending is projected to reach $3.7 billion (CA$5 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.
Offshore Newfoundland and Labrador, investments reached $1.2 billion (CA$1.6 billion) in 2023 and are expected to increase to $1.5 billion (CA$2 billion) in 2024. 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, CAPP said.