Investments in crude oil this year in Canada could rise by as much as 22 percent, according to the Canadian Association of Petroleum Producers.
While this is an improvement over 2021, the expected spending total of US$26.2 billion (C$32.8 billion) is still much lower than the annual industry spending a decade ago, CAPP said as quoted by CBC.
"Today we're at $32 billion, and we're only capturing about six per cent of global investment," CAPP president Tim McMillan said. "We've lost ground to other oil and gas producers, which I think is problematic for a lot of reasons … and it leaves billions of dollars of investment that is going somewhere else, and not to Canada."
Canadian oil production is set to increase by 18 percent this year, according to the national energy industry regulator. That would come in at a total of close to 4 million barrels of crude daily. In spite of the federal government's ambitious emission-reduction plans, the oil output increase is perfectly understandable, according to Canada's natural resource minister.
"For the [oil] demand that continues to exist, Canada needs to extract value from its resources, just like the United States, the United Kingdom in the North Sea, and Norway," Jonathan Wilkinson told the FT earlier this month.
Higher oil prices are certainly helping make more generous spending plans. Like all other benchmarks, Canadian crude has been on the rise, hitting the highest in seven years, according to CAPP's McMillan. Yet even with such high prices, he says, investment has not increased proportionally.
One of the reasons for this may be the increased caution that the industry is applying in a world still dominated by the pandemic. Another is Canada's reputation as a difficult place to invest in energy. With its track record in pipeline cancellations, a heavy regulatory load, and "negative government policy signals," per CBC, many investors think twice before they enter Canadian oil and gas.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More