CALGARY, Alberta, April 7 (Reuters) - Capital spending in
Canada's oil and gas sector this year is expected to drop 62
percent from 2014 when crude prices started to collapse,
according to the Canadian Association of Petroleum Producers, as
the global crude rout drags on.
The C$50 billion decline to C$31 billion ($23.62 billion)
will be the largest two-year fall since records began in 1947
and highlights how Canada's oil and gas industry has been forced
to retrench in the face of a 65 percent drop in crude prices
since mid-2014.
2014 was a high point for capital investment in oil and gas,
when the industry spent a record C$81 billion.
"Canada needs urgent action to remain an attractive market
for oil and gas investment, and to be competitive relative to
other oil and natural gas producing jurisdictions," Tim
McMillan, CAPP president and chief executive officer, said on
Thursday after the report was released.
McMillan said expanding Canada's export pipeline network and
developing LNG export facilities should be a national priority
to help create economic activity.
However, TransCanada Corp's TRP.TO Keystone XL pipeline to
the United States was rejected last year after years of
opposition from environmentalists and local landowners, and no
company has made a final investment decision about any of the 19
LNG export terminals proposed for Canada's Pacific Coast.
As capital spending plummets, the total number of wells
drilled in Western Canada is forecast to drop to 3,500 this
year, down 66 percent from the 10,400 wells drilled in 2014.
CAPP said including indirect jobs more than 110,000 people
across Canada have been laid off as a result of the oil and gas
downturn and the impact was being felt across the country.
"Governments will see revenues from industry's royalty and
tax payments reduced further, which could impact their ability
to fund public services such as universities, hospitals and
roads," McMillan said.
Despite the cut in spending and reduced conventional oil
well drilling, Canadian crude production is expected to keep
growing this year as new oil sands projects planned before the
downturn, such as Canadian Natural Resources Ltd's CNQ.TO
Horizon expansion, come into operation.
($1 = 1.3124 Canadian dollars)