Canada’s oil and gas industry is on track to see its biggest two-year capital spending decline in its seven-decade history, according to the Canadian Association of Petroleum Producers.
Companies are expected to invest $31 billion in 2016, a 62 per cent drop from the 2014 record of $81 billion.
It’s the biggest drop since CAPP and its predecessor organizations began keeping track in 1947 — the year of Alberta’s first major oil discovery.
The U.S. benchmark oil price was above US$100 a barrel in mid-2014. Now, it’s at about US$37 — below what most producers need to be profitable.
CAPP estimates 110,000 direct and indirect jobs have been lost in the downturn, which began in late 2014 and continued to deepen through to last February when crude fell below US$30 a barrel for a time.
“It is a really tough time,” CAPP president and CEO Tim McMillan said Wednesday.
“Almost no one is left untouched within their family circle and within their social circle.”
Compounding the pain is the inability for Canadian oil and gas producers to reach markets outside of the United States, a major global petroleum player itself.
Efforts to build oil export pipelines and liquefied natural gas terminals have faced stiff environmental opposition and regulatory delays.
In a release, CAPP said building that infrastructure should be a “national priority” but did not specify what concrete actions it wants provincial and federal governments to take.
“I think there’s a role for government and a role for Canadians to say: ‘This is important to us. We’re proud of the way we produce our oil and gas,'” McMillan said in an interview.
He added that the pullback in oil and gas capital investment has been faster and deeper in Canada than anywhere else.
“And that’s because we’re not just battling global prices, we’re battling global prices with a further discount.”
Moving forward with pipelines and LNG, he said is “the first and most obvious place to put us on that level playing field.”
Much of the debate around pipelines and LNG has focused on the broader climate impacts from fossil fuels.
Greenpeace campaigner Keith Stewart said CAPP is being “wilfully blind” to how the global push to combat climate change is transforming energy markets.
“Canada needs to take action so that we win in the new world of low-carbon, renewable energy, not prop up the fossil fuel industry,” he said. “Oil companies have a choice: transform themselves into clean energy providers, or go the way of the dinosaur.”