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The oil industry's main lobby group garnered double takes from energy buffs everywhere by slashing its long-term forecast for crude output by 17 per cent.

No wonder. A 1.1-million-barrel-a-day drop in previously expected output 15 years out is dramatic, being equal to nearly a third of Canada's total production today.

Crude markets are blamed for much, but keep in mind that the seeds for the lowered outlook were sown long before oil prices crashed as costs surged and project proposals piled up faster than they could ever be funded.

Oil's fall only made the hurdles much tougher to clear. Even executives with the most successful oil sands producers have said they are worried about a "productivity deficit" compared with other parts of the energy world.

In its new outlook, the Canadian Association of Petroleum Producers is now calling for crude production to climb to 5.3 million barrels a day by 2030, not 6.4 million as predicted just a year ago.

Numerous corporate decisions to slash or defer spending on major projects, especially in the oil sands, have pulled the forecast lower. The impact of capital cutbacks would start to take hold around 2020, when output is now pegged at 4.6 million barrels a day, a drop of 300,000 from last year's view.

These are important numbers, as they point to where billions of dollars may – or may not – get spent in an industry the federal government has pinpointed as crucial to Canadian prosperity, and on which thousands of livelihoods depend. Unfortunately, they join a confusing set of signals for the energy sector.

The industry is being forced into austerity by crude prices that the Organization of Petroleum Exporting Countries signalled at its meeting last week will not rebound into the $100-a-barrel district any time soon. This shows the power that the cartel, notably Saudi Arabia, retains in the world energy market.

Yet Canadian heavy-crude prices, though not spiking, have climbed to their highest point this year, as refiners can't seem to get enough. Conventional oil output, however, could suffer in the medium term, as the sector has shifted its biggest drilling targets from crude to natural gas, according to the National Energy Board. Meanwhile, overall drilling activity is half of what it was a year ago.

Add the unknowns of future royalty rates in Alberta and carbon-emission restrictions, and what some investors are seeing is a funhouse-mirror picture of the future of energy in Canada.

But look at last year's CAPP forecast, and indications of the current situation were there. Even then, the group called for a 300,000-barrel-a-day reduction in 2030 volumes from its prediction a year earlier, blaming surging costs and constraints in capacity to move oil out of Western Canada.

Before the crude crash picked up steam in the last part of 2014, major oil sands players Statoil ASA and Total SA had shelved multibillion-dollar projects, blaming too-pricey construction, the tight Alberta labour market of the time and delays in adding new export capacity.

A host of smaller oil sands developers had run short of capital needed to finish projects because of cost overruns and delays, and now some have been forced into court protection from creditors, showing that this not a game for the light of pocket.

So what has happened since? Indeed, pipeline projects that were delayed in 2014, including TransCanada Corp.'s Keystone XL and Enbridge Inc.'s Northern Gateway, are still stalled. Construction costs have come down, but, with oil worth about 60 per cent of what it was, major new developments are not getting green lights.

One of the most fascinating parts of the CAPP forecast is its "no-growth" oil sands scenario, which takes into account just the projects that are currently producing or are under construction (and there are several, including the massive Fort Hills mining project).

Oil sands production would flatten out at 3.07 million barrels a day around 2020, and start to decline after 2025, the group predicted.

It's hard to fathom oil prices staying depressed for such a long time, keeping a tight lid on all new projects. But such a thing even being considered as part of a CAPP forecast is a huge change for an industry that just a few years ago was banking on decades of growth, come what may.

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