Canada is the world's sixth largest oil producer, and its sector has been hit hard by plunging crude prices over the past two years. Photograph: (Getty)
For the first time ever, Canada's oil sector might lose money, billions, in fact, two years in a row
Canadian oil production will decline by one per cent this year due to lower investment and disruptions from wildfires, says a report released Tuesday.
The study also projected that for the first time ever, Canada's oil sector will lose money, billions, in fact, two years in a row.
Canada is the world's sixth-largest oil producer, and its sector has been hit hard by plunging crude prices over the past two years.
An Alberta oil sands production stoppage in May due to wildfires sweeping across the region, which holds the world's third-largest oil reserve, further exacerbated its woes.
The Conference Board of Canada said the sector is on track to post an annual loss of $10 billion ($7.6 billion US) this year, following a record loss of $11 billion ($8.4 billion US) in 2015.
"Canadian oil producers continue to be challenged by the extended battle for market-share that has kept global crude prices stubbornly low," Conference Board economist Carlos Murillo said in a statement.
"For the first time in recorded history, the (Canadian) oil industry is expected to post not only the largest level of losses but also back-to-back consecutive losses," he said.
Profitability concerns led to the significant pullback in investment, resulting in lower production levels, said the report. From 2014 to 2017, investment in the Canadian oil industry will have been cut by an estimated $38 billion ($29 billion US).
Companies have been also slow to cut costs, as revenues fell.
The Conference Board did offer one glimmer of hope, predicting the industry will return to the black in 2017 if oil prices recover.