Canadian oil industry jobs, revenues plunge

The Canadian oil industry will shed nearly 8,000 jobs this year as revenues fall by $43 billion (Can.) in response to the plunge in oil prices, predicts the Conference Board of Canada.

A report by the group predicts a pretax loss of more than $3 billion for the industry.

At current prices, the report says, new projects in the Canadian oil sands and tight-oil plays are seen as uneconomic. According to the report, break-even costs in the oil sands are $60-80/bbl (US) for a steam-assisted gravity drainage project and $90-100/bbl for a mine.

The report projects oil investments will fall to $40 billion this year from $56 billion last year.

Still, total crude oil production in Canada will rise to 3.8 million b/d this year from 3.6 million b/d in 2014 as projects based on past investments come on stream.

The report projects an average oil price of $55/bbl in 2015. Reduced investment will ease production growth as low oil prices spur demand.

“However, the days of triple-digit oil prices have passed for the immediate future,” the report says. “With the rise of horizontal drilling and hydraulic fracturing, the US industry will be able to quickly respond and increase production if prices reach $80/bbl, putting a hard cap on prices.”