Ottawa, ON — Profits in Canada’s oil industry are expected to decrease by over 24% in 2009 from record levels in 2008, according to the Conference Board’s Canadian Industrial Outlook: Canada’s Oil Extraction Industry – Summer 2009.
“The Canadian oil industry has long been a boom or bust industry, and that has been the case over the past year,” said Todd Crawford, economist. “The price of crude went from highs of over US$140 to lows of US$35 in the span of just six months. Even though prices have doubled since the start of the year, they remain more than 50% below their 2008 record highs.”
Pre-tax profits will drop to $11.6 billion, down from $15.3 billion in 2008. The outlook covers upstream activity and excludes the gas extraction industry, which is a separate forecast.
Production declined in 2008 and is expected to increase by only 1.8% this year due to deferrals of numerous megaprojects in the non-conventional industry and a poor year for conventional drilling. The slowdown in production and investment will also lower growth in total costs to 12.8%, well below the 27% increase recorded in 2008.
Starting next year, the oil extraction industry will begin to see strong production gains as prices are expected to resume their long-term upward trend. Industry revenues and costs are both expected to increase by an average of more than 20% annually over the next four years.