Canadian Capex Set for 20-Year Low: Rystad

Upstream spending by Canadian oil and gas producers is poised to collapse more than 40% this year, Norwegian consulting firm Rystad Energy said in an April 27 report.

It now expects upstream spending in Canada to reach just C$21bn ($US14.2bn), down from about C$35bn in 2019. Cuts in the shale and oil sands sectors will account for 80% of the total, Rystad said.

“In percentage terms, 2020 represents the most drastic spending reduction in Canada in recent memory, and far surpasses year-over-year declines of 31% in 2015 and 33% in 2009,” the report said. “In our estimate, the country’s upstream spending this year will sink to levels last observed in the early 2000s, when conventional onshore activity and the then-nascent oil sands sector still dominated the upstream space.”

Earlier this year – before the global Covid-19 pandemic decimated world oil and gas demand – the Canadian Association of Petroleum Producers (Capp), representing more than 80% of Canada’s producers, forecast 2020 upstream capital spending would increase by C$2bn, to C$37bn.

In addition to the spending cuts, Rystad said it had increased its base-case curtailment forecast for Q2 2020 to 1.2mn b/d, and said cuts could be as high as 1.3mn b/d.