Canada’s energy sector is expected to raise capital investment after a surge in oil and gas prices, but it will be a more modest increase than during previous boom cycles, the Bank of Canada said in a quarterly survey on Monday.
There are several factors holding back investments, with companies holding onto only around 40% of their cash flow for capital expenditure, compared to an average of above 100% in the years preceding the pandemic, the bank said.
Another factor holding back investment is uncertainty over the long-term demand for hydrocarbon resources amid a shift toward low-carbon energy, the bank said.
“Competition for labor is particularly strong for oil-field service firms that are seeing high turnover among drilling and well-service crews,” the bank said after consultations with gas firms and industry analysts.