Government of Alberta hails CAPP forecast of growth in oil and gas for 2020

Investment in Canada’s oil and gas sector will increase by $2 billion in 2020 after four of the last five years saw declines amid the ongoing oil glut, according to an industry group.
 
The Canadian Association of Petroleum Producers (CAPP) said Thursday that the six per cent increase in capital investment will bring the total amount to $37 billion for the year, which is still less than half of the $81 billion invested in 2014.
 
In the oilsands, investment is expected to hit $11.6 billion in 2020, an eight per cent increase from $10.7 billion in 2019.
 
Investment growth in oil and natural gas capital projects outside the oilsands will also see a boon. Capital spending is projected to hit $25.4 billion, a four per cent increase from $24.4 billion last year. 
 
Nationally, CAPP predicts investment in the oil and gas sector will create or sustain 11,500 direct and indirect jobs, with 8,100 located in Alberta.
 
“It’s a reflection of the hard work and determination on many fronts to bring the industry into a more competitive position,” said CAPP president Tim McMillan in a news release. “That includes the corporate tax cut by the Government of Alberta, and incenting crude by rail under curtailment, which is helping to attract business and investment.”
 
McMillan also lauded Alberta’s red tape reduction panel and municipal tax reform, as well as Saskatchewan’s move to increase oil production, as investment drivers.
 
McMillan added the industry feels cautious optimism over Line 3’s scheduled return, the Trans Mountain pipeline expansion and pre-construction on Keystone XL — all projects that would create new export pipeline capacity.
 
Energy Minister Sonya Savage applauded CAPP’s forecast in a news release.
 
“I am extremely pleased to see capital investment beginning to return to our province,” Savage said. “Government is taking concrete steps to show that Alberta is open for business and results like this prove our plan is working.”
 
However, economist Trevor Tombe said governments should be cautious about tying growth projections to specific policy decisions.
 
It is “impossible” to forecast the effect of the UCP’s corporate tax cut since there are so many factors at play when it comes to the economy, Tombe said in an interview with AB Today.
 
“I think we should take any claims around policy influence, in the short term, with a grain of salt.” 
 
Tombe says CAPP’s projections could signal a turnaround for Alberta’s lagging economy, which has seen monthly job declines since the start of 2019.
 
Statistics Canada’s most recent monthly job numbers show a rise in national weekly earnings, driven by higher wages in Alberta where average earnings grew by 2.6 per cent to $1,180 year over year. 
 
But, while the incomes of those working have climbed, the province also shed 5,200 jobs in November.
 
Economists don’t agree on a single definition for a recession, but Tombe said the latest economic indicators show signs pointing in that direction, such as the fact that more sectors are experiencing a decrease in employment than an increase.
 
“Economies recover after recessions and economies recover after periods of low growth — there are natural ups and downs here,” Tombe said. “Policymakers are quick to claim credit when things turn around and they shouldn’t be. And opposition rush to blame the government when things turn south. These are developments that are beyond the policy of the government.”