Investment in Canada’s oilsands is forecast to grow for the first time since prices crashed in 2014.

The Canadian Association of Petroleum Producers is forecasting capital spending will rise by 8.4 per cent to $11.6 billion this year, citing the Alberta government’s corporate tax cut and the easing of oil production limits as catalysts.

Distroscale

“It has been a tough five years, and Canada has not fared well at a time when global demand continues to rise,” CAPP chief executive Tim McMillan told Bloomberg News.

“It has taken some hard work, especially at the provincial level, to change the global view and put Canada back in a position where it can start to attract appropriate levels of capital again.”

Expenditures for the country’s oil and natural gas sector could increase more than five per cent to $37 billion, the forecast states. Outside the oilsands, spending is projected to rise about four per cent to $25.4 billion.

Story continues below This advertisement has not loaded yet, but your article continues below.

The additional $2 billion in capital spending this year will create or sustain about 11,800 direct and indirect jobs across Canada, CAPP projected. About 8,100 of those jobs will be in Alberta, which has struggled with elevated unemployment since the 2014 price crash.

The Alberta government has cut the province’s corporate tax rate by two points to 10 per cent and pledged further reductions, to eight per cent, by 2022.

“Government is taking concrete steps to show that Alberta is open for business and results like this prove our plan is working,” Energy Minister Sonya Savage said in a statement.

Even with this year’s predicted increase, the industry is still a long way from its headiest days. The projected oilsands spending for 2020 is about one-third of the peak of $33.9 billion in 2014, according to CAPP figures.

Congested pipelines created a glut of oil in storage in the western Canadian province in recent years, depressing prices and causing its government to curtail output by the biggest producers.

However, oil producers are cautiously optimistic proposed pipeline expansions — badly needed to move Alberta oil to U.S. refineries — are advancing after years of delay, the association said.

Photo by Supplied / jpg

“From our perspective, we do have two significant potential phases that we could make a (final investment decision) on probably towards the end of this year, but we’re not at that decision yet,” Cenovus chief executive Alex Pourbaix told reporters.

Story continues below This advertisement has not loaded yet, but your article continues below.

“Last year was a pretty tough year, so I think eight per cent is not surprising, give how tough last year was.”

Another industry group, the Petroleum Services Association of Canada, revised higher its 2020 forecast for wells drilled in Canada, up seven per cent to 4,800 wells, due to eased curtailments. Compared with last year, however, drilling activity is seen falling by two per cent.

“On a positive note, with three major oilsands companies planning higher activity this year with some curtailment quotas relaxed, we have increased our forecast by 300 wells,” PSAC president Gary Mar said in a statement.

“Overall, however, although many companies experienced a stronger start to 2020, we believe this is primarily due to work deferred from (fourth quarter) 2019 that will not translate into increased activity for the rest of the year.”

On a provincial basis, the organization estimates 2,460 wells will be drilled in Alberta this year, up 14 per cent from its original forecast.