They say it takes money to make money and, in turn, to sustain existing employment, create new jobs, and stimulate other economic activity. This is especially true in Alberta where the capital-intensive oil and gas industry is so important. Without significant capital expenditure on exploration and production, the oil and gas simply does not flow.

Let’s start with the good news. Statistics Canada’s most recent survey of spending intentions estimates that oil and gas companies will increase capital spending in Alberta by 1.6 per cent in 2020. This will bring annual oil and gas capital expenditures to just over $24 billion this year compared to about $23.7 billion in 2019.

Now the bad news. The expected rise in spending in 2020 is relative to the lowest level of annual capital spending seen since 2009 when fallout from the Great Recession was constraining capital investment around the world. Oil and gas capital spending in 2019 was, in fact, almost 16 per cent lower than in 2018 and about 60 per cent lower than the record set in 2014.

In addition, while Statistics Canada goes to great pains to ensure the accuracy of its estimates, they are nonetheless based on a sample of companies and a survey process that began back in November. Since that time, there have been both positive and negative developments that might affect actual spending decisions. 

As such, it is worth noting that the estimate of oil and gas spending in Alberta in 2019 that was just released is 11 per cent lower than the original estimate that came out at this time last year. This does not mean that spending in 2020 will be lower than the current estimate. But it does suggest that, if the investment climate deteriorates because of things like the COVID-19 outbreak or a lack of progress on pipelines, the projected increase could easily turn into another decrease.