Oilpatch profits to hit $23B this year

CBC News
Thursday, February 14, 2008

Record high oil prices and rising production from the oilsands should see profits in Canada's oilpatch hitting almost $23 billion this year, the Conference Board said Thursday.

That would represent an 18 per cent jump from 2007's profit figure.

The processing plant at the Suncor oilsands
project in Fort McMurray, Alta.,
pumps steam into the air.
(Jeff McIntosh/Canadian Press)

"With the price of oil expected to stay well above $80 US per barrel for the entire year, industry profits will once again reach new highs in 2008," said Conference Board economist Todd Crawford.

"However, rising industry costs and an expected decline in prices next year, due to additional global supply coming online, should cause profits to weaken in 2009," he said.

Crawford predicts that the ever-cyclical industry will see its profits tumble by 29 per cent in 2009 before recovering in 2010.

The report calls for a 9.2 per cent increase in total crude production this year, with the extra production coming from non-conventional sources like the oilsands. Conventional production will continue to drop.

The big profit increase this year will come despite rising costs and labour and material shortages, it says.

The independent research group also forecasts that Alberta's royalty increases in 2009 will have little effect on oilpatch investment as high oil prices will continue to attract new money.

http://www.cbc.ca/money/story/2008/02/14/oilpatch.html