OTTAWA, Aug. 1 /CNW Telbec/ - Profits in Canada's oil industry are
expected to plummet by almost 25 per cent this year from their peak in 2006,
according to the Conference Board's Canadian Industrial Outlook: Canada's Oil
Extraction Industry - Summer 2007.
"Lower oil prices earlier in the year and rapidly rising industry costs
will cut into industry profits in 2007," said Louis Thériault, Director,
Canadian Industrial Outlook Service. "But at $13 billion, profits will still
be high by historical standards."
Looking forward, gains in production and improved productivity will allow
profits to rise again starting in 2008.
A slight rebound in conventional oil production this year and strong
gains in non-conventional activity, such as oil sands mining, will increase
total crude oil production by 7.5 per cent in 2007. Production growth is
expected to remain strong for the rest of the forecast period thanks to
ongoing development of Canada's oil sands resources.
Rising costs in Canada's oil sector are becoming increasingly problematic
for energy companies. Labour and material shortages in Alberta are pushing the
cost of new investment projects to near-prohibitive levels. Cost increases are
expected to moderate to 6.7 per cent in 2007, but beginning in 2008, costs are
forecast to grow by double digits on average over the next four years.
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