OTTAWA: The Conference Board of Canada released its 2017 report on the oil industry. The forecast is for continued losses for most of the year, even though financial conditions are better and there’s the promise of greater pipeline capacity. In its report released on Monday, the board says capital investments are expected to fall to $22 billion from a high of $27 billion in 2016. This drop is attributed to construction projects in the Alberta oilsands and offshore Newfoundland being completed, reports CBC Canada. Board economist Carlos A. Murillo says the industry is rebounding after hitting the bottom in the first quarter of 2016, posting an overall $11 billion loss. Murillo says the sector won’t see positive numbers until the fourth quarter this year. “Global demand is expected to increase in coming years, suggesting that prices will continue the upward trajectory that began late last summer.”
He adds that the industry should be expected to recover enough to match its 2010 profits of $13 billion by 2021. However, industry costs are forecast to increase by 13 percent per year between 2017 and 2021, partly due to pipeline transportation constraints. This situation could force more producers to switch to “crude-by-rail options,” according to Global News. “The way we kind of look at it is because the losses have been so large over the last couple of years, it takes a bit of time to get up there to the point that you actually are starting to make money again,” said Murillo. “Of course, improving revenues will help, but there are already cost pressures.”
