Oil and gas capital spending revised down
Oil and gas capital spending was originally expected to be roughly the same as last year, but the estimate has been lowered in light of the oil price crash and the global pandemic.
By ATB Economics 12 August 2020 1 min read
Alberta’s oil and gas extraction sector looms large in the province, accounting for 54 per cent of total capital spending over the last 10 years.
So it’s definitely not good news that capital spending in Alberta’s oil and gas extraction sector in 2020 will be the lowest it has been since at least 2006 when the current data series begins.
While still significant at $16.6 billion, this year’s spending will be 30 per cent (-$7.1 billion) below the amount spent in 2019 and 58 per cent (-$22.8 billion) below the 10-year average.
Oil and gas capital spending was originally expected to be roughly the same as last year—which was already 39 per cent below the 10-year average—but the estimate has been lowered in light of the oil price crash and the global pandemic.
Total capital spending in Alberta is expected to be down by 19 per cent this year (-11.4 billion). If we exclude oil and gas, spending is expected to be down by 12 per cent (-$4.3 billion).
Spending intentions are lower in 14 of 19 major sectors, including real estate and rental and leasing (-$999.1 million), transportation and warehousing (-$808.4 million), and manufacturing (-$680.8 million).
Sectors that will see some uptick in spending include health care and social assistance (+$185.5 million), educational services (+184.9 million), and information and cultural industries (+$29.4 million).
Nationally, capital spending is expected to be $242.6 billion this year or about 9 per cent (-$25.3 billion) lower than in 2019.