CAPP predicts oil investment will drop by a third as prices languish

FORT MCMURRAY, Alta. — The Canadian Association of Petroleum Producers is expecting oilpatch investment to drop by a third — or $23 billion — this year compared with 2014, while output is seen growing at a slower clip than previously predicted.

The oil and gas industry group released an updated forecast Wednesday as crude prices continue to languish below US$50 a barrel.

The industry in Western Canada is expected to spend $46 billion this year, down from the $69 billion it shelled out last year.

Output is still expected to grow — to 3.6 million barrels a day in 2015, about 150,000 higher than last year. However, that's 65,000 barrels per day less than previously forecast.

Even still, CAPP president Tim McMillan says new pipelines are necessary to carry Western Canadian crude to market.

CAPP forecasts oilsands capital spending will be $25 billion this year, compared with $33 billion in 2014.

"These are challenging times and Canadians across the country will see or feel the impacts," McMillan said.

Among those concerned about the knock-on impacts from lower crude is Malcolm Brost, who owns a welding and sandblasting business east of Calgary.

"This might just be a hiccup," he said while preparing to meet with customers in Fort McMurray, Alta, in the heart of the oilsands.

So far, Brost's business hasn't been affected, but he's bracing for tough times.

"The second quarter might be a lot scarier than this one," he said. "We exist because of oil and gas"