Canada’s Oil and Gas Industry: Industrial Outlook, Summer 2005

Canada’s oil and gas sector will enjoy record profits of $18 billion in 2005, thanks in large part to sky-high oil and gas prices.

Oil production will actually drop by 1.6 per cent in 2005, due mostly to a drop in synthetic crude oil production from Suncor and Syncrude in the first half of the year. Bitumen production, however, is expected to make double-digit gains, with several mining projects going ahead. Conventional crude oil production will decline, while offshore production will recover some of its losses from 2004. Over the medium term, the oil sands will lead growth in oil production.

Natural gas production in the West will be up only slightly this year, despite record prices that keep pushing drilling and exploration, even in marginal areas.

Looking forward, the profitability of the oil and gas industry will weaken somewhat over 2006 to 2009, due to a slow decline in oil prices and lower productivity in natural gas fields. But it will still average profits of $14.4 billion per year.