Canada Projects Head Upstream

By Lori Musser

After a period of sluggishness, Canada’s oil and gas sector has turned a corner, with upstream investment dramatically improving project prospects. Industry leaders assess the opportunities.

From Issue 1, 2024 of Breakbulk Magazine.

(6 minute read)

While the world is focused on the energy transition, fossil fuels are still essential to modern life. Canada is the world’s fourth largest producer of oil and fifth largest producer of natural gas, and its level of production is rising.

Ten-plus future oil and gas projects with price tags ranging from CDN$5 billion to CDN $55 billion (US$3.7 billion to US$40.3 billion) are on the drawing board, and while some are delayed, all offer up great opportunities for supply chains and for the project service sector.

The global oil price crisis that hit in the spring of 2020 made its mark in Canada, with a plunge in production, employment and exports. A year later, Statistics Canada figures showed that the oil and gas sector had largely recovered, except for its capital expenditures.

Uncertainty that persisted, related to developments such as new regulations, the end of the Keystone XL project, the global energy transition, and carbon pricing-related production cost increases, hampered investment decisions.

According to Weimin Wang with StatsCan’s Economic Analysis Division, oil and gas capital expenditures had been in decline since 2014: “Capital outlays fell by 55 percent from 2014 to 2019 and then by another 36 percent in 2020.”

A turnaround came in 2021. Oil and gas extraction capital expenditures and expenses were on the rise. From 2021 to 2022, capital expenditures soared from CDN$25.8 billion to CDN$37.1 billion, StatsCan reported.

Lisa Baiton, president and CEO of the Canadian Association of Petroleum Producers, in a November 2023 speech to the Canadian Club of Toronto, said she expected investment in upstream production in Canada would continue to grow, reaching CDN$40 billion in 2023.


Production Trends Upwards

Investment isn’t the only marquee moment. Canada’s crude oil production hit 24.8 million cubic meters in August 2023, its best monthly showing since StatsCan started collecting the data in 2016. Synthetic crude oil drove production with a 16.6 percent year-over-year increase.

Canadian natural gas production has also been on the rise, with year-over-year growth of 2.9 percent to almost 660 million gigajoules in August 2023.

ConstructConnect’s January 2023 roundup of ten of Canada’s upcoming oil and gas construction projects was topped by Nisga’a Lisims’ CDN$55 billion LNG project, currently in pre-design. The list includes five projects in British Colombia, three in Alberta, one in Nova Scotia and one in Newfoundland, each valued in excess of CDN$5 billion. Several of the projects have announced delays, but the slate is promising overall.

The Bay du Nord project in the Flemish Pass basin, located northeast of Newfoundland, has been postponed for up to three years, but, “we are confident it will proceed,” said Energy NL CEO Charlene Johnson. She added that the project’s estimated reserves are almost one billion barrels, and that its product will be the sort of lower carbon oil the world desperately needs.

Norway’s oil giant Equinor and its partner BP announced the delay in May 2023, mentioning challenges related to changing market conditions and inflation.

Equinor spokesperson Ola Morten said there isn’t much new to say about the project, except that, “Equinor continues optimization work to improve the Bay du Nord development project business case following the project postponement decision.” They remain busy in the Newfoundland market.

The company has been in Canada since 1996 and has been “a leading explorer” in offshore Newfoundland for the last decade. Equinor is still planning two new exploration wells in 2024, Morten said to Breakbulk.


Broad Benefits

Canada’s oil and gas projects – including new construction, expansions and upgrades, and ongoing extraction work – generate opportunities in the supply chain, as well as in engineering, fabrication and construction, workforce development, and research and development, among other specialties.

Baiton said the oil and gas supply chain across Canada supports more than 1,000 businesses and 400,000 jobs. She said: “There is simply nothing else that can replace the national economic benefits that come with producing and exporting oil and natural gas in Canada.”

While there is a large roster of new projects pending, other projects are nearing completion. In British Columbia, a trio of oil and gas megaprojects are wrapping up. The Trans Mountain pipeline expansion and the Coastal GasLink pipeline are almost complete, and LNG Canada is expected to wrap next year.

The Port of Vancouver – along with its terminal operators, carriers, and other transportation partners – serve as important links in the megaproject supply chains. In 2021 and 2022, the port logged roughly 1.2 and 1.3 million metric tons, respectively, of construction materials, machinery, piping and similar types of project cargo. The specialty cargoes were largely handled by DP World Fraser Surrey and Western Stevedoring at Lynnterm. Established corridors for overweight and over dimensional project cargo help expedite movements to site, according to the port.

Oil and gas is also vital to Newfoundland and Labrador’s economy, accounting for a whopping 25 percent of the province’s nominal GDP over the last two decades. The province’s economic recovery plan, The Big Reset, plans to double offshore oil production by 2030. The window of opportunity is short because, the report said, the global energy transition is expected to eventually eliminate the market for fossil fuels. Eventually is the key word. Newfoundland’s offshore fields continue to produce.

Johnson said: “The Hebron project is our latest producing field and continues to be a significant producer, along with Hibernia, our first project, which while celebrating its 25th anniversary one year ago, is a stalwart of our offshore and has produced over a billion barrels of oil.”

The types of supply and service opportunities associated with oil and gas fields vary greatly. Johnson described some recent projects, including a 2024 refit of the SeaRose FPSO, stationed on the White Rose field, and the West White Rose expansion project, which will include the installation of a concrete gravity structure wellhead platform in 2025, with first oil anticipated in 2026.

“Similarly, the Terra Nova FPSO has recently returned offshore after an asset life extension program and is expected to return to production in the coming weeks, if not days. This will extend the project for upwards of 10 years and produce 70 million barrels,” Johnson said.

Simultaneously, Newfoundland is undertaking significant work with “sector partners as we look to reach net zero targets. This includes in-depth exploration of our CCUS (carbon capture, utilization and storage) potential and the possibility of commercializing our natural gas resources,” Johnson said. She also mentioned wind, tidewater, hydrogen, and hydroelectric pursuits.


Clock Ticking

While crude prices have been the key factor influencing capital expenditures in Canadian oil and gas, that’s changing. Regulation and declining demand mean that fossil fuels will eventually be rejected. The question is when.

The International Energy Agency expects that global demand for fossil fuels will peak during this decade. Conversely, Canada, according to the Canada Energy Regulator, is likely to increase production throughout this decade and remain “resilient” in its production over the next 30 years. The cost-effective “oil sands” that deliver a large portion of Canadian oil are expected to produce for a while yet.

CAPP CEO Baiton said that Canadian oil and gas producers are proving “that growing production and concurrently lowering emissions is possible,” noting that Canadian upstream producers are among the nation’s leaders in Cleantech investment. And, “Canada’s offshore industry produces the lowest-emissions intensive oil in the world,” according to Baiton. She said Canada’s oil sands, for example, have a plan to get to net-zero by 2050.

In Baiton’s recent November presentation, Unleashing Canada’s Greatest Competitive Advantage, she said that Canada’s unique energy advantage, if unleashed, can enhance Canada’s geopolitical might and its economy while lowering global emissions.

Canada has new fossil fuel projects, expansions and upgrades in the offing, and plans to continue to ramp up production for a while, according to the Canada Energy Regulator. It seems that oil and gas both have a place in the future of energy, providing opportunities for project cargo handlers for a few more decades.


Equinor and bp are members of the Breakbulk Global Shipper Network, an extensive networking platform for executives operating at the top end of the project supply chain in sectors such as oil and gas, energy and renewables, mining and minerals, construction, forestry, industrial manufacturing, and aerospace.

The next in-person meet-up for BGSN members will be at Breakbulk Middle East 2024, taking place on 12-13 February at the Dubai World Trade Center.

TOP PHOTO: Rig in Canada's Hibernia offsore oilfield. CREDIT: Suncor
SECOND PHOTO: The SeaRose FPSO will serve the West White Rose expansion project. CREDIT: Suncor