Oil and gas consumption to reach highest level in ten years: Enserva

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Capital spending on oil and gas is forecast to exceed $40 billion by 2025, the highest level in a decade, according to a new report by oil industry association Enserva.

Increased export capacity brought about by the expansion of the Trans Mountain Pipeline (TMX) and the upcoming LNG Canada project, which is scheduled to begin commercial operations in mid-2025, is fueling an increase in costs that is expected to boost production in the coming months. .

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“We’re positioned for growth over the next three to five years like we haven’t seen in nearly 15 years,” said Randy Ollenberger, an analyst at BMO Capital Markets, at the launch of Enserva’s State of the Industry report. , released on Tuesday.

The increase in capacity associated with TMX increased Canada’s export capacity by 13 per cent, he said, and the increase in capacity from LNG Canada could increase natural gas export capacity by 20 per cent.

“These are big numbers,” Ollenbrger said. “And all of that will boost investment, so we’re going to see growth in oil production in Canada as a result of that pipeline capacity, and we’re going to see growth in natural gas production.”

Capital spending in Canada’s oil sector is set to increase by more than nine per cent to 2024 year-on-year, led by double-digit growth in the tropics, according to a report by Enserva (formerly the Petroleum Services Association of Canada), which represents. fracking, oilfield development and manufacturing companies.

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But with global oil demand expected to slow next year due to slower growth in China, Enserva expects big spending on Canadian oil and gas to be largely muted. It predicts that spending growth next year will be driven by non-oillands upstream producers in Alberta, and is slightly less than 2 percent year-over-year.

Total spending on Canada’s energy sector could reach $40.2 billion by 2025, a significant increase from the $25.6 billion spent in 2021.

Enserva CEO Gurpreet Lail said the latest capital forecast represented an “impressive measure” of a stable sector in the face of volatile or dark conditions in asset prices.

“This was no small thing, especially when you think about what the story would have been if we hadn’t had two major infrastructure projects in the past. We were going to tell a very different story today,” he said. “And that’s what we want to convey to everyone – that infrastructure is important. It is important to our health; it is important to Canadians.”

Oil and gas drilling increased by more than five percent this year and is forecast to increase by about 2.8 percent in 2025, Enserva said.

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Enserva said it expects 5,881 wells to be drilled in Canada next year, a slight increase from the estimated 5,720 wells drilled in 2024.

TMX also helped offset the discount in Canadian heavy oil, Enserva said, with most forecasts for the generally revised Western Canadian Select (WCS) rising to an average price of $86 a barrel by 2025.

And following a bad year in 2024 for natural gas prices at the AECO hub in Alberta (with prices reaching just $1.5 per million British thermal units (Mmbtu) in the third quarter), Enserva said the average AECO forecast for 2025 it is now $3.1/ Mmbtu due to market strength, with the start of LNG Canada helping to reduce the storage surplus that has depressed prices for months.

The upstream sector has also seen an increase in jobs, according to Enserva, especially in the service industry between June 2023 and September 2024, but oil and gas continues to have trouble attracting new talent, Lail said.

“We are still seeing trends where we will need more people by 2030 … and 40,000 people will be needed by 2030,” he said. “And by 2050, 70,000 people are scheduled to retire. So, if we do the math, we need more people coming into this field. “

• Email: mpotkins@postmedia.com

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