Canada's two biggest oil producers are cautiously boosting spending next year despite congested pipelines and government production limits, waging they can thrive in a weak market better than smaller companies that are reining in capital.

Canadian Natural Resources Ltd. (CNRL) and Suncor Energy Inc. — both based in Calgary — announced higher 2020 capital budgets this week.

The announcements followed a bleak year for the industry, as full pipelines prompted Alberta to curtail production, share prices sagged, and Encana Corp. — one of Canada's oldest and largest energy companies — said it would move its corporate headquarters from Calgary to the United States and changing its name to Ovintiv Inc.

Canadian Natural bought Devon Energy Corp's Canadian assets this year for $2.8 billion. It said on Wednesday it expects to spend $4.05 billion in 2020, $250 million more than in 2019, after Alberta lifted curtailments on new oil wells last month.

Suncor expects capital spending between $5.4 billion and $6.0 billion, with higher spending linked to adopting digital technology and reducing greenhouse gas emissions.

"Those with better balance sheets and more robust asset bases have certainly started to dip their toe into ramping spending modestly on projects driving margin enhancement, not necessarily pure volume growth," said Matt Murphy, upstream analyst at Tudor Pickering Holt & Co.

Husky and Imperial reduced spending

Husky Energy Inc. — whose majority shareholder is Hong Kong tycoon Li Ka-shing — and Imperial Oil Ltd. — controlled by Exxon Mobil Corp. — reduced spending plans for next year, saying Alberta's curtailments distorted market conditions.

"(Canadian companies) will have to start expanding elsewhere or consolidate inside Canada. But it's not a great place to invest at the moment," said Curtis Schirrmacher, investment advisor at Acumen Capital Partners.

"The long-term impact will be detrimental to Alberta and eventually to Canada."

To be sure, the oilsands' biggest growth projects — CNRL's Horizon expansion, Imperial's Aspen and Teck Resources' Frontier — remain on hold.

"It'll be some time before there's comfort across the oilsands space, at least, in sanctioning major capital spending growth on volume," Murphy said.

Alberta's UCP government said in November that new conventional oil wells would not be subject to production limits initially imposed by the previous NDP government, in a bid to boost its ailing economy.

It has also allowed companies to produce barrels at about set levels as long as that output moves by rail.

Canadian Natural, which operates in western Canada as well as in the United Kingdom North Sea and offshore Africa, said it would add 60 drilling locations across Alberta and put three additional rigs to work next year.

"With our size we are able to capture additional margin," said Canadian Natural president Tim McKay.

The oil and gas producer expects production of 1.14 million barrels of oil equivalent per day (boepd) to 1.21 million boepd next year, higher than the 1.09 million boepd to 1.15 million boepd it estimates for 2019.

The company said its 2020 production could have been higher by 10,000 barrels per day (bpd) to 25,000 bpd, if not for Alberta's mandatory curbs, but it was hopeful curtailment levels will be reduced or eliminated in 2020.