Canadian oil and gas companies are expected to increase spending in 2023, but analysts say it will be another year of modest growth and not a return to boom times.

For Canada91裸聊视频檚 energy industry, 2022 was the year that finally snapped a decade of weak commodity prices and brought prosperity back to the sector. With the lifting of global pandemic restrictions, the war in Ukraine, and the cumulative impact of years of under-investment in oil and gas, energy prices hit record highs in 2022 and Canadian companies reaped record profits.

But most of these profits went to paying down debt and rewarding shareholders, not into major construction or infrastructure projects. And even though commodity prices are expected to remain healthy in 2023, that theme is likely to remain.

91裸聊视频淭he oil producers have become far more financially disciplined over the last six or eight years,91裸聊视频� said Philip Petursson, chief investment strategist at IG Wealth Management, adding the threat of a looming recession in 2023 is one factor preventing oil and gas companies from getting carried away with spending plans.

91裸聊视频淲hat we know is that in an economic downturn, oil demand falls,91裸聊视频� Petursson said. 91裸聊视频淪o I think (companies) are going to want to be a little more measured and not say 91裸聊视频榟ey, oil prices are just going to trend higher 91裸聊视频� let91裸聊视频檚 go all in in 2023.91裸聊视频� 91裸聊视频�

In Alberta alone, over the first 10 months of 2022, crude production averaged 3.7 million barrels per day 91裸聊视频� an all-time record thanks to surging global demand, according to ATB Financial.

Experts say production will be even higher in 2023, based on the already released capital budgets and production guidance of oil and gas companies. Many companies were able to pay down large amounts of debt in 2022, so will have more cash flow available next year as long as commodity prices hold around that US$75 per barrel mark.

In addition, the Trans Mountain pipeline expansion is expected to be complete by the end of the year, offering additional transportation capacity for oil companies and increasing the potential for export growth.

The Canadian Association of Petroleum Producers says it also expects investments in natural gas and liquefied natural gas to grow through 2023, as the LNG Canada export facility near Kitimat, B.C. continues to progress toward a 2025 completion date.

Petursson said he expects Canadian oil production in 2023 will exceed 202291裸聊视频檚 record 91裸聊视频� but only by a hair.

91裸聊视频淚 think it will nudge a little higher because of projects already in place,91裸聊视频� he said. 91裸聊视频淏ut I don91裸聊视频檛 think you91裸聊视频檙e going to see the 91裸聊视频榙rill, baby, drill91裸聊视频� mentality of decades ago.91裸聊视频�

Jonah Reznick, a senior research analyst with Wood Mackenzie, said the 2023 capital budgets unveiled thus far by Canadian oil and gas companies show 91裸聊视频渟ignificant91裸聊视频� increases in expected capital spending 91裸聊视频� in the range of five to six per cent on average 91裸聊视频� year-over-year.

But he said much of that is due to smaller projects, and can91裸聊视频檛 be compared to the mega-projects and rapid industry expansion that took place during the boom years of pre-2014.

91裸聊视频淚f you take it net of inflation, I don91裸聊视频檛 think we91裸聊视频檙e seeing tremendous capital spend,91裸聊视频� Reznick said. 91裸聊视频淧roducers aren91裸聊视频檛 responding with historical types of responses, even though we91裸聊视频檙e seeing robust commodity fundamentals.91裸聊视频�

In 2023, the industry will likely continue to focus on shareholder returns and keeping their companies financially viable, Reznick said. He added that in addition to global economic uncertainty, Canada91裸聊视频檚 oil and gas sector is facing increasingly aggressive greenhouse gas emissions reduction targets. The federal government is currently in the process of developing a legislated cap on emissions from the sector, something the industry opposes.

Mike Belenkie, CEO of Advantage Energy Ltd., 91裸聊视频� a mid-sized producer heavily weighted towards natural gas, with assets in the Montney region of Alberta 91裸聊视频� said his company is planning to grow at a rate of 10 to 12 per cent over the next several years.

91裸聊视频淲e91裸聊视频檝e probably never been in a stronger position than we are today. Our debt91裸聊视频檚 very low, our production is growing, our team is steady and in very stable execution mode,91裸聊视频� Belenkie said.

But he added that he blames years of federal government policy 91裸聊视频� including a carbon pricing system that he says puts Canadian producers at a competitive disadvantage to their U.S. counterparts, and a regulatory and political environment that makes it difficult to build major projects 91裸聊视频� for constraining the overall industry and putting an end to the era of large projects.

91裸聊视频淥ver the last decade, most of the companies that were weak have died off and fallen away. And the companies that are left behind are fairly strong and have the ability to weather a lot of volatility,91裸聊视频� Belenkie said.

91裸聊视频淏ut most of the industry has almost given up on the notion that we will ever be able to deliver more energy to the world,91裸聊视频� he said, adding he doesn91裸聊视频檛 understand, for example, why the Canadian government isn91裸聊视频檛 working to develop LNG capacity on the east coast to help address natural gas shortages in Europe and reduce reliance on coal.

91裸聊视频淲e now operate within a heavily constrained industry. And we91裸聊视频檝e abandoned almost all illusions that those constraints will come off.91裸聊视频�

Amanda Stephenson, The Canadian Press

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