Depth of pandemic's impact on oilpatch in 3rd quarter revealed in report

A new report from Statistics Canada this week is revealing how much the country's oil production and crude exports were hit this summer as the fallout from COVID-19 helped sink fuel demand.

From July through September, production of crude oil and equivalent products fell more than 10 per cent year-over-year to 61.2 million cubic metres — the lowest level of third-quarter production in four years.

The biggest factor for the plunge was a drop in oilsands extraction, which declined nearly 13 per cent. The report pointed to weak demand and delayed maintenance at some oilsands facilities as reasons for the decrease. 

"Notably, the average monthly production since April was 10.9 per cent (2.5 million cubic metres) lower compared with the same period in 2019," the report adds. 

Exports of crude oil and equivalent products were down nearly 10 per cent compared with the same quarter in 2019 as demand for Canadian crude oil from the United States remained low. 

In September alone, exports of crude oil and equivalent products fell nearly nine per cent — to 15.9 million cubic metres during the month — to the lowest level since February 2018. 

Demand for fuel over the summer, usually a period of high demand driven in large part by holiday traffic, also continued to slide through the period, according to the report. 

Domestic gasoline consumption fell 11 per cent in July, 14 per cent in August and six per cent, year-over-year, in September. Consumption of jet fuel fell more dramatically, down 68 per cent year over year, in September.

The pandemic's economic impact, highlighted by the report, has taken a toll on businesses and workers. 

The oilpatch has slashed spending plans and laid off thousands of employees this year as companies have tried to navigate the fallout of the pandemic. As crude prices plunged, so did the share values of many oil companies.

Analysts anticipate more mergers within the sector, which is also expected to mean fewer jobs.

Recent figures by the Petroleum Labour Market Information (PetroLMI) say Canada's oil and gas industry employed approximately 170,570 workers in November, down seven per cent, or 12,600 workers, from the same month last year.

Hope now is that vaccines for COVID-19 over the coming months will help restore more normal economic activity, including pent-up demand for travel and more commuting traffic.

But even as positive vaccine news has helped raise crude prices recently — lifting the North American benchmark price to over $45 US a barrel — new surges of the virus and further lockdowns continue to weigh on prices.