Oil revenue takes a hit, quick recovery not in sight

Thanks to low oil prices, the Saskatchewan government expects to rake in $660 million less in oil revenues than it projected a year ago.

It's another sign of doldrums in the oil patch, where low prices have taken a toll.

Last year, the government projected it would make $1.6 billion in oil revenues, based on a barrel of oil selling for $94 US.

This year, the 2015-16 provincial budget dials down those expectations.

The financial plan released by Finance Minister Ken Krawetz Wednesday projects raking in only $903 million, 42 per cent less than the 2014-2015 budget.

This year's projection is based on a barrel of West Texas intermediate crude going for $57 US. Today's price is $15 below that projected average for the year.

On the plus side, the province also expects it will take in about $13 million more in land sales money than budgeted last year. That's the money oil companies pay to drill on Crown land.

In the medium term, oil prices aren't expected to recover to $85 US for another three years, provincial officials believe.

Lower oil revenues is one of the reasons the Saskatchewan Party government is using to justify cuts to some programs. Overall spending is going up about 1.2 per cent in the fiscal year that begins April 1.

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