The Canadian Association of Petroleum Producers (CAPP) said total capital spending in upstream oil and natural gas operations in Canada is forecast to decline to $31 billion in 2016. Spending reached $81 billion in 2014.
CAPP said the 62% decline is the largest 2-year drop since CAPP and predecessor organizations started tracking this data in 1947.
In western Canada, the total number of wells drilled is forecast to be 3,500 in 2016, a 66% drop from the 10,400 wells drilled in 2014.
“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,” said Tim McMillan, CAPP president and chief executive officer.
He said more than 110,000 people across Canada have lost their jobs as a result of the downturn in oil and gas.
“The impacts of declining activity in Canada’s oil and gas industry are felt by many families across the country,” McMillan said. “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 stressed the need for timely expansion of Canada’s pipelines network to deliver to more markets at home and abroad, along with the development of LNGs export facilities (OGJ Online, July 16, 2015).
“Connecting our resources—by all means and in all directions—to more markets is critically important to improve the prosperity of all Canadians, even with the current declines in prices and investment,” McMillan said, noting that Canadian oil production continues to grow as previously approved oil sands projects come into operation.
“More market access and being able to attract investment that creates jobs—these are the twin determinants of the long-term success of Canada’s oil and natural gas industry, and our ability to put Canadians to work.”