Thank you, Mr. Chair.
Thank you to the committee members for inviting CAPP to be part of this presentation.
I'll start off by introducing CAPP briefly. Then I'll move on to the effects of the current price environment on our industry and the effects we think that will have on Canada.
CAPP represents the upstream oil and gas producers in Canada; 90% of all the oil and natural gas produced is from the members of the Canadian Association of Petroleum Producers. We are by far the largest private sector investors in Canada. In 2013 we had about 74 billion dollars' worth of investment in building the Canadian economy, and in 2014 about $70 billion. Out of that we've seen $18 billion a year, on average, contributed to governments for taxes and royalties over the last several years.
We make up 20% of the stock market, or at least we did until six months ago. With the current price environment, that has reduced to about 12%. We are 20% of Canada's exports. We employ over half a million people. Our supplier network reaches really across the country with more than 2,500 suppliers to the energy sector.
Price volatility in the commodity market is the norm, not the exception. Our industry has been through high and low price environments in the last several decades. We as an industry are actively positioning ourselves right now. You will see those effects really across Canada to ensure that we can be successful in the medium and long term, and Canada can maintain its strong position as a supplier of choice in the world for energy products.
The Bank of Canada came out in January and made some statements around the effects of the low price environment on the Canadian economy. I'll quote the bank, “The considerably lower profile for oil prices will be unambiguously negative for the Canadian economy in 2015 and subsequent years.” The effect of the low price we think will be felt across Canada—through our supplier network, through the employment that is sourced from across the country, and through the taxes and royalties that are paid to really all levels of government and across the country.
Getting into the specifics of what our expectations are, we put out an interim report in January updating our annual report on investment expenditures. In January we said that we saw a 33% reduction in capital expenditure in 2015. We've seen that further eroded in the last few months. With those public statements from January, we would break it apart to about a 40% reduction in conventional oil and gas and about a 25% reduction in oil sands investment. The reason for this is that oil sands investments are multi-year and larger projects. Projects that are in years two, three, four, or five will get ongoing investment and will be brought into production. The western tight oils will have a production profile that is higher at the front end and declines more rapidly, and the time from drilling to production is so much shorter that it can be far more elastic with price sensitivity.
We also want to be clear that even with the lowering of investment by 33%, going from over $70 billion to below $50 billion, we will still be by far the largest investor in the Canadian economy. The effects that will have on production in the short term I think are clear to point out as well, because they aren't always obvious. We would expect to see a reduction in production from what we had predicted, but the Canadian energy sector is going to continue to grow production even in the current environment, even with the lower investments. The numbers we put out in January predict about a 150,000 barrels a day increase in 2015, and in 2016, roughly 190,000 barrels a day. As I said, those were a snapshot in time in January, but we are looking to increase production regardless of the current price. We want to ensure that our industry is strong in the long term and that Canada maintains its position as a supplier of choice around the world.
Thank you for the time here this morning.