The oil and gas industry is not going to recover anytime soon

With prices and demand falling and a global pandemic, as well as regulatory uncertainty and asset depreciation, improvements in the industry are unlikely until at least mid-2021, said Ben Brunnen, vice president of tax and economic policy for the Canadian Association of Petroleum Producers (CAPP), in an interview with Resource World. "We have seen prices stabilize since April, but we are nowhere near a recovery," he said, adding that current levels of new investment cannot sustain new investment and demand could fall significantly - bad news for Canadian industry, which has lost 135,000 direct and indirect jobs - and more are expected in 2021 - while investments fell 35%. "It will be a volatile and uncertain environment for the next 4-6 months". This is backed up by Bryan Benoit, Grant Thornton International's National Managing Partner in the US, Energy. "The turmoil is the result of oil and gas price wars and the Covid-19 pandemic, and it is a fact that the recovery in oil and gas prices is closely related to the ups and downs in the reopening of economies around the world ", he said. "However, stability in oil and gas markets will most likely not materialize until the second quarter of 2021, and we may not see oil prices return to pre-pandemic levels until 2022." Much is at stake. In a recent Canadian IPSOS poll, 44% said economic recovery should be a top priority for the government, while 64% said oil and gas must be part of that recovery. Another 55% believe that supporting jobs in this industry is more important than ever. That's understandable, given that oil and gas exports were over C $ 112 billion in 2019 - about 19% of total export revenues - and the industry typically supports half a million jobs and contributes more than $ 8 billion annually to government revenues across the country . A report by Statistics Canada found that capital spending in the oil and gas sector fell 54% for the quarter ended June 30, while oil production is expected to average 4.38 million barrels per day in 2020 which corresponds to a decrease of 6.6%. "Economic recovery is paramount to Canadians and we are encouraged to see support across the country for a strong oil and gas industry," CAPP President and CEO Tim McMillan said in a press release. "Government policies must be viewed in the context of a strong plan for economic recovery. The time has come to signal to the international community that Canada is a good place to do business and to market our strengths and invest in ours again Industries to attract ". Apparently in response to environmental opponents, the press release said that the oil and gas sector is Canada's largest investor in "clean technology" and environmental protection, spending about $ 3.5 billion annually. But Ottawa plans to reduce the carbon intensity of liquid fuels by 30 million tons by 2030, which could force suppliers to use more biofuels and buy carbon credits, while terminals need to be overhauled to include more renewable resources and gas stations need to be redesigned to sell cleaner fuels. Thanks to factors such as falling demand, restructuring that includes selling out smaller firms to larger companies, as well as containing the risks posed by the pandemic, players in the oil and gas industry have had to slow down and until things return to normal, exploration will turn into Come to a standstill, said Brunnen. The expected surge in gasoline sales from the lifting of pandemic restrictions has not materialized, and the end of the summer driving season has given the market little boost. Air traffic had also come to a standstill due to the virus and the airlines had problems, said Brunnen. "There is still some investment going on because companies will continue to replace their declining volumes and some of them have commitments," he said, "but in general not much is happening in terms of investment. That's not a priority right now."