OTTAWA, Sept. 18 /CNW Telbec/ - Gas industry profits will decline in 2009 by more than 60 per cent from 2008 levels, according to the Conference Board's Canadian Industrial Outlook: Canada's Gas Extraction Industry - Summer 2009.
"So much has changed for the natural gas industry in just one year," said Todd Crawford, Economist. "Last year, revenues more than doubled over the first six months as gas prices skyrocketed. Now, low prices and the tough credit conditions have created a perfect storm that sent drilling activity in Canada tumbling this year. "
After falling 5.2 per cent last year, production is forecast to drop by about 5 per cent again in 2009, with further declines forecast over the next four years. The outlook covers natural gas extraction activity and excludes the oil extraction industry, which is a separate forecast.
Lower material costs will drive total costs down by about 13 per cent this year. However, the reprieve from cost increases will be only temporary. Because the natural gas industry competes with the oil extraction industry for much of the same labour and materials, costs will continue to rise.
Profits will total just $2.3 billion this year, the lowest for the gas industry since 1999. Profits should resume growth starting in 2010 as prices improve.
SOURCE Conference Board of Canada
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