Conference Board confident on oil sands outlook
John Morrissy, Financial Post
Published: Wednesday, September 02, 2009
OTTAWA -- Output from Canada's oil sands will double and profits in the oil business will triple by 2013 as rising crude prices kick-start megaprojects delayed by the economic downturn, the Conference Board of Canada said Wednesday.
The board's summer outlook for the Canadian oil-extraction business forecasts that crude prices driven south by the economic downturn will slash pre-tax profits for Canadian producers by 24% from $15.3-billion in 2008 to $11.6-billion in 2009.
But as the U.S. economy recovers, rising oil demand will lift prices to a point that enables Canada's expensive and controversial oil sands projects become profitable again, said board economist Todd Crawford.
"The Canadian oil industry has long been a boom or bust industry, and that has been the case over the past year . . . but stimulus packages around the world will lead to improved performance starting in 2010."
Accordingly, oil prices will resume their long-term upward trend, eventually reaching US$103 by 2013. Surging revenue growth related to higher prices will result in profits topping US$32-billion by the end of the forecast.
"Moreover, the resumption of construction on delayed oil sands projects and production increases at existing oil sands producers will boost output from the so-called non-conventional sources from today's 1.22 million barrels a day to 2.4 million barrels a day by 2013," Crawford forecasts.
The study focuses solely on oil extraction and excludes the "downstream," side of the business such as gasoline retailing. It also excludes the country's sizable natural gas business, which the board covers in a separate report.
John Morrissy, Financial Post
Published: Wednesday, September 02, 2009
OTTAWA -- Output from Canada's oil sands will double and profits in the oil business will triple by 2013 as rising crude prices kick-start megaprojects delayed by the economic downturn, the Conference Board of Canada said Wednesday.
The board's summer outlook for the Canadian oil-extraction business forecasts that crude prices driven south by the economic downturn will slash pre-tax profits for Canadian producers by 24% from $15.3-billion in 2008 to $11.6-billion in 2009.
But as the U.S. economy recovers, rising oil demand will lift prices to a point that enables Canada's expensive and controversial oil sands projects become profitable again, said board economist Todd Crawford.
"The Canadian oil industry has long been a boom or bust industry, and that has been the case over the past year . . . but stimulus packages around the world will lead to improved performance starting in 2010."
Accordingly, oil prices will resume their long-term upward trend, eventually reaching US$103 by 2013. Surging revenue growth related to higher prices will result in profits topping US$32-billion by the end of the forecast.
"Moreover, the resumption of construction on delayed oil sands projects and production increases at existing oil sands producers will boost output from the so-called non-conventional sources from today's 1.22 million barrels a day to 2.4 million barrels a day by 2013," Crawford forecasts.
The study focuses solely on oil extraction and excludes the "downstream," side of the business such as gasoline retailing. It also excludes the country's sizable natural gas business, which the board covers in a separate report.
