Oil sands procurement from Indigenous suppliers increases to $2.4 billion
A survey by the Canadian Association of Petroleum Producers (CAPP) of oil sands producers shows the increasing role of Indigenous suppliers to the industry. In 2019, about $2.4 billion was spent on procurement from Indigenous businesses; 16 percent higher than in 2018 and 53 percent higher than in 2017.
The number of Indigenous suppliers has also grown from 263 in 2017 to 275 in 2019, with cumulative procurement spending in the three-year period totalling about $5.9 billion. The oil sands companies that participated in the survey are responsible for more than 95 percent of Canadian oil sands production.
"The oil and natural gas industry is continuously working to enhance opportunities for reconciliation, including business partnerships that generate sustained economic, social and community benefits for Indigenous communities through resource development," said CAPP president and CEO Tim McMillan. "The industry is proud to support education and training initiatives and strives to engage with local communities. Indigenous employment in oil and gas is critical, contributing skills and local knowledge that are essential to project success and continued operations."
Indigenous supply chain businesses contribute to oil sands operations in a variety of areas including construction, camps and catering, equipment services, transportation, environmental, drilling, engineering services, and retail among others.
In addition, the survey shows oil sands producers are continuing their commitment and engagement in the communities where they operate, increasing the total amount of money put into community investment, consultation funding and other initiatives in Indigenous communities. The total for these activities reached $64.2 million in 2019, compared to $58 million in 2018, and $41.8 million in 2017.
Community investment can include things such as education initiatives for Indigenous communities, training programs, physical infrastructre and cultural program funding specific to local communities. Consultation funding applies to ongoing operations in an Indigenous community, but also includes project specific consultation, site visits, technical reviews, and funding for studies and agreement negotiations.
As Indigenous businesses grow their participation in resource development, Indigenous people are a growing proportion of oil and natural gas employment, making up 7.4 percent of the industry's workforce in 2019 (up from 4.8 percent in 2018).
"In 2021, CAPP is forecasting a 14 percent increase in upstream oil and natural gas investment. We look forward to the benefits a strong energy sector can generate not only for Indigenous communities and partners, but for Canada's economic recovery," McMillan said.
- Indigenous supply chain spending totalled $2.36 billion in 2019, up from $2.02 billion in 2018, and $1.54 billion in 2017.
- In 2019, oil sands producers spent $28 million on consultation funding, $32 million on community investment, and $4 million on other initiatives in Indigenous communities.
- Indigenous people make up 3.3 per cent of total Canadian employment. In the oil and natural gas sector, that number is much higher with Indigenous people making up 7.4 per cent of the workforce, more than twice the national average. Of that workforce, Indigenous people make up about 8.1 percent of pipeline workers and 8.2 per cent of oil and gas service workers. Indigenous workers account for about 6.5 per cent of employees in exploration and production.
- Capital spending in the upstream sector is expected to be around $3.36 billion higher this year, reaching $27.3 billion, compared to an estimated total investment of $24 billion in 2020.
- Conventional oil and natural gas capital investment for 2021 is forecast at $20 billion, up from an estimated $17.2 billion last year. Capital investment in the oil sands is forecast at $7.3 billion in 2021, up from an estimated $6.7 billion total in 2020.
- The IEA projects heavy oil and bitumen demand will grow 23 per cent by 2040, reaching 4.42 million barrels per day.
- Canada is expected to supply approximately 79 per cent of that total.
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