Rob Roach, ATB ECONOMICS | September 10, 2024

Gaining energy: Oil and gas capital spending in Canada

We pay a lot of attention to the price of crude oil and natural gas. You can, for example, watch the price of a barrel of West Texas Intermediate Crude get updated every few minutes throughout the day.

Prices, of course, are important, but so is a less well-known barometer of what is happening in the oil and gas sector: capital spending (a.k.a. capex).

Capex in the oil and gas sector includes things like seismic exploration, constructing facilities and camps, and purchasing equipment. As such, it also means employment for engineers, project managers, rig workers, technicians, and many others.

What may surprise you is just how much this adds up to.

Data released last week by Statistics Canada show that the industry spent $11.9 billion in the second quarter on capex—the highest it has been since 2015.

Adding up the last four quarters, the amount comes to $42.1 billion. That works out to over $1,000 per Canadian.

Looking at the trend, capex in Canada has been mostly on the rise since the low point reached early in the pandemic (when the price of crude oil collapsed) with increases posted in 13 of the last 16 quarters.

Increased oil and gas transportation capacity, relatively strong crude prices, and development of liquefied natural gas (LNG) export projects have helped spur large capex increases in Q1 (+8.5%) and Q2 (+14.8%).

*The data in today’s Twenty-Four have been seasonally adjusted.

Answer to the previous trivia question: A John Deere X9 1100 combine can harvest up to 30 acres of wheat in an hour.

Today’s trivia question: How many medals did Canada’s athletes win at the Paris 2024