Good times ahead for Canadian oil industry

Ottawa, Ont.: Canada’s oil extraction sector can expect more competition as productivity ramps up in the coming year, according to the Conference Board of Canada’s industrial outlook.

The report estimates production in Canada’s oil extraction industry will grow by 4.1 per cent by the end of the year, mostly due to increased oil sands production and drilling in the conventional extraction sector.

“Global consumption has rebounded almost to pre-recession levels. As a result, prices have nearly doubled from their lows of 2009,” said Todd Crawford, economist for the Ottawa-based research firm.

Those lows slashed the industry’s profits from $18.2 billion to just $1.7 billion in 2009, but the sector managed to remain profitable by rapidly cutting costs.

Petro-Canada came out on top in 2009 with $27,585 million in revenues, followed by Suncor Energy with $25,036 and Imperial Oil with $21,292.

Prices steadily climbed during first quarter of 2010, but ongoing uncertainty over the global recovery and high inventories will limit further increases this year, the report said.

It forecasts pre-tax profits will reach $8.4 billion for 2010, as growth outpaces cost increases. Increased activity will cause fierce competition for materials and labour as companies will need to again keep costs under control.

The outlook assumes that laws stay the same. Changes to tighten environmental regulations would pose a risk to the industry’s medium-term outlook.

Read the Canadian Industrial Outlook Summer 2010: Canada’s Oil Extraction Industry