Capital spending in Alberta’s oil and gas extractions sector in 2020 will be the lowest it has been since at least 2006 when the current data series began, according to a report by ATB Financial’s Economics & Research Team.
“While still significant at $16.6 billion, this year’s spending will be 30 per cent (-$7.1 billion) below the amount spent in 2019 and 58 per cent (-$228 billion) below the 10-year average,” said ATB in its daily economic update The Owl.
“Oil and gas capital spending was originally expected to be roughly the same as last year—which was already 39 per cent below the 10-year average—but the estimate has been lowered in light of the oil price crash and the global pandemic.”
ATB said the sector has accounted for 54 per cent of total capital spending in the province over the last 10 years.
“Total capital spending in Alberta is expected to be down by 19 per cent this year (-11.4 billion). If we exclude oil and gas, spending is expected to be down by 12 per cent (-$4.3 billion),” said ATB.
“Spending intentions are lower in 14 of 19 major sectors, including real estate and rental and leasing (-$999.1 million), transportation and warehousing (-$808.4 million), and manufacturing (-$680.8 million).
“Sectors that will see some uptick in spending include health care and social assistance (+$185.5 million), educational services (+184.9 million), and information and cultural industries (+$29.4 million).”
ATB said capital spending nationally is expected to be $242.6 billion this year or about nine per cent (-$25.3 billion) lower than in 2019.