Updated March 2017
This section provides an overview for capital expenditures:
Figure 1.10 [Tableau] shows historical and projected capital expenditures in Alberta’s conventional oil and gas and oil sands sectors. Capital expenditures for development of conventional oil and gas fell to $10 billion in 2016 from $17 billion in 2015. This contrasts with the sector’s strong growth from 2009 to 2014, when capital expenditures increased from $12 billion in 2009 to $27 billion in 2014.
In 2017, expenditures in conventional oil and gas are forecast to increase to $12.0 billion in response to slightly stronger price assumptions and the continued development of formations such as the Cardium and Lower Mannville for crude oil and Montney and Upper Mannville for natural gas. These development areas typically generate positive returns with shorter payout periods.
Conversely, oil sands capital expenditures are forecast to decrease from an estimated Cdn$16.0 billion in 2016 to Cdn$ 14.2 billion in 2017, reflecting the continued deferral of projects, successful deployment of cost-reduction strategies, the uncertainties in the oil sands subsector (including Alberta’s Bill 25, Oil Sands Emission Act, that implements a 100 megatonne cap on oil sands emissions), and crude oil export pipeline capacity additions.
Total expenditures are forecast to remain relatively flat until 2020, with an increase in conventional oil and gas sector spending offset by a decline in capital expenditures in the oil sands sector. For the remainder of the forecast period, capital expenditures are projected to moderately increase, again with more capital expenditures assumed to be directed to the conventional oil and gas sector.
Capital expenditures in oil sands development are not forecast to increase due to assumed project cancellations and deferrals. Expenditures in the oil sands are expected to be primarily aimed at sustaining capital and expanding existing projects.
Details about how the forecast was developed can be found in the methodology section.
The value of production of Alberta’s energy resources from 2012 to 2016 is shown in Figure 1.11 [Tableau]. Table 1.7 [HTML] provides the value of Alberta’s energy resource production for 2016 and forecast values to 2026. In the future, revenues from upgraded and nonupgraded bitumen are expected to continue to account for most of the value of production in Alberta.