Canadian oil industry to lose more than $2 billion in 2015

OTTAWA, Oct. 28, 2015 /CNW/ - The profitability of Canada's oil extraction industry is being challenged by the sharp and prolonged weakness in prices. The industry is expected to post a pre-tax loss of $2.1 billion this year, compared to a profit of close to $6 billion in 2014, according to The Conference Board of Canada's latest Canadian Industrial Outlook: Canada's Oil Extraction Industry.

"While Canadian oil companies have acted swiftly, delaying capital investments, cutting expenses, and reducing employment levels, profitability has plummeted," said Michael Burt, Director, Industrial Economic Trends, The Conference Board of Canada. "However, these cost-cutting efforts should begin to bear fruit next year, as the industry is expected to slowly return to profitability, even as oil prices remain low by recent standards."


  • The Canadian oil industry is expected to post a pre-tax loss of more than $2 billion this year.
  • Future global demand for crude will be limited by weaker economic growth prospects.
  • Despite low prices, investment cutbacks, and a sharp decrease in conventional drilling activity, Canadian crude oil production is expected to continue growing over the next five years.

Crude oil prices are expected to remain weak in the near term, as supply exceeds demand. Limited by weaker economic growth prospects and the ongoing trend of decreasing oil intensity, the outlook for global demand for oil has weakened. The U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA) forecast that growth in crude oil demand is expected to decelerate over the medium term, rising by an annual average of 1.1 million barrels per days (MMb/d), compared with 1.5 MMb/d over the previous five years (2010–14). Crude oil prices are expected to start recovering next year, but are not expected to return to their 2014 levels over the next four years.
Low oil prices have taken a toll on producers' revenues and cash flows, resulting in a significant contraction in investment intentions. Industry revenues are expected to fall by 22 per cent this year, but start recovering next year. Indeed, from 2016 to 2019, revenues are expected to grow at an annual average rate of 14 per cent, driven by a combination of slowly recovering oil prices and increases in production. Likewise, investment levels are expected to drop significantly in the short term but to recover thereafter. Seven of Canada's largest oil producers have reported that their combined capital expenditures will be approximately 39 per cent lower this year than in 2014, a testament to the effect lower crude oil prices are having on the Canadian industry.

Despite the drop in investment spending, industry production will continue to grow over the next five years. Given that oil sands projects require large upfront capital investments and that construction and lead times can span several years, projects that are currently under construction will continue to be developed even in a low-price environment. Thus, past and ongoing investments will continue to drive production higher, despite the industry's ongoing challenges.

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SOURCE Conference Board of Canada

For further information: Yvonne Squires, Media Relations, The Conference Board of Canada, Tel.: 613- 526-3090 ext. 221, E-mail:; or Sean Burgess, Media Relations, The Conference Board of Canada, Tel.: 613- 526-3090 ext.294, E-mail:, If you would like to be removed from our distribution list please email

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