Updated May 2022
Figure S1.7 shows the historical and forecast of capital expenditures for Alberta's oil and gas sector, oil sands sector, and emerging resources sector.
Total capital expenditure was Cdn$20.2 billion in 2021, representing a 26 per cent increase from 2020. The COVID-19 pandemic led to a historic drop in global oil demand and created a surplus in supply that affected oil and gas investment. However, global energy prices have since risen in 2021 and Q1 of 2022, leading to a more favourable investment environment. The forecast price is expected to remain volatile in the near term as the threat of new COVID-19 outbreaks remains and as geopolitical events in Eastern Europe persist. As a result, most of the near-term capital expenditure growth is expected to come from crude oil and natural gas as the breakeven point on investment is relatively low, and the payout period is short compared with oil sands projects.
Capital expenditure over the 10-year forecast period will remain below 2014 peak levels.
Oil and Gas Capital Expenditures
In 2021, the oil and gas sector (excluding oil sands) spent an estimated Cdn$10.9 billion in capital expenditures. Expenditures increased by 28 per cent from 2020 because of increased drilling activity.
Number of Wells Placed on Production
Crude oil wells: In 2021, 1765 crude oil wells were placed on production in Alberta, up from 1061 wells in 2020.
Natural gas wells: In 2021, 789 natural gas wells were placed on production, up from 591 wells in 2020.
Forecast for 2022 to 2031
Oil and gas capital spending is forecast to increase to Cdn$17.0 billion in 2022 as production responds to high oil prices. This represents a 56 per cent increase from 2021 expenditures.
Capital expenditures are expected to increase further to Cdn$18.3 billion in 2023 as operators' financial conditions improve.
Capital expenditure growth is forecast to slow in 2024 as markets rebalance, which corresponds to the price forecasts. Oil and gas capital expenditures are projected to increase in 2025 and onwards, reaching Cdn$19.4 billion by 2031.
Oil Sands Capital Expenditures
Oil sands capital expenditures are estimated at Cdn$8.7 billion in 2021. This is a 20 per cent increase from Cdn$7.3 billion in 2020, which was the lowest level of oil sands investment since 2005. In recent years, producers focused less on new projects and more on expansions and efficiency enhancements.
Sustaining capital expenditures for in situ and mining projects, which is capital spent by oil sands producers to maintain or replace fixed assets, also increased in 2021.
Forecast for 2022 to 2031
Oil sands capital expenditures are forecast to reach Cdn$11.6 billion in 2022. With improved prices and restored production anticipated in 2022 and onwards, oil sands capital expenditures are projected to increase to Cdn$12.3 billion in 2023.
Spending in the mining sector is projected to fluctuate beyond 2022 based on the expected timelines of expansion and debottlenecking projects. By the end of the forecast period, oil sands capital spending is projected to reach Cdn$14.1 billion, a value that remains relatively low compared with the last decade.
Emerging Resources Expenditures
With a high degree of uncertainty for emerging resources development, capital spending is projected to average Cdn$0.7 billion annually over the forecast period, reaching Cdn$0.8 billion by 2031. This spending is projected based on public announcements for hydrogen, helium, and geothermal projects and estimated capacity additions.