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Pumpjacks at work pumping crude oil near Halkirk, Alta.Larry MacDougal/The Canadian Press

The pain of low crude prices is far from over in Canada's oil patch, according to a forecast from the country's industry association.

The newest grim numbers from the Canadian Association of Petroleum Producers show total capital investment in the sector is likely to continue to drop – looking at 2015 to the end of this year, compared with the heyday of $100 per barrel oil in 2014. The association says capital spending in the oil and natural gas sector is likely to decline $50-billion, or 62 per cent, from 2014 levels, the largest two-year percentage drop since the data were first tracked in 1947 – the year of the oil discovery in Leduc, Alta., and the beginning of the Canada's modern energy industry.

With an oil price slide that began more than 20 months ago, total capital investment in Canada's oil and natural gas sector is forecast to decline to $31-billion in 2016, down from a record $81-billion in 2014, CAPP said on Thursday.

"We have never had a two-year pullback of this magnitude," said Tim McMillan, CAPP president and chief executive. "It's affecting oil and natural gas. It's conventional and oil sands. We're seeing the pullback in all sectors."

One of the main takeaways of the report is that while 2015 was a bad year for the energy industry, 2016 will have even less activity, said Jackie Forrest, vice-president of energy research at ARC Financial Corp.

Overall crude and natural-gas prices are likely to be lower this year than in 2015, she said. CAPP predicts the total number of wells drilled in Western Canada will decline to 3,500 in 2016, plummeting from the 10,400 drilled 2014. The drop is significant even from last year, when 5,400 wells were drilled.

Many oil sands mega-projects that were planned while crude prices were high are slowing construction this year as they come closer to completion, also meaning less capital spending, she added. On a more positive note, part of the reduction in capital spending comes from a downward pressure on costs, in everything from labour to steel, she said.

"You're getting more done with a dollar this year than you were last year."

Alberta's NDP government says it faces multiyear deficits as it attempts to deliver public services in the face of the crash in oil prices. In an interview, provincial Energy Minister Marg McCuaig-Boyd said the industry is in a holding pattern on all decisions about capital spending.

"The ones that have been around for a long time are saying this is even worse than the early eighties," Ms. McCuaig-Boyd said hours before a live TV address from Premier Rachel Notley, who was expected to discuss her government's plan for jobs and the ailing Alberta economy on Thursday evening.

"It's not just about the capital expenditures; it's about those families and the lack of work for people, too."

The CAPP report also increased its count of job losses, direct and indirect, from the downturn – now pegging the figure at 110,000 from a 100,000 estimate in October.

In an interview, Mr. McMillan pointed to data compiled by the association, and Barclays, that shows that this year and last – the prime years of the oil rout – capital investment has dropped in Canada even further than in other oil-producing regions of the world, including Saudi Arabia, Africa and North America as a whole.

The industry argues that a lack of pipeline access impairs Canada's ability to compete with other crude-producing regions, including the United States, for both the best pricing in markets for crude and natural gas, and investment dollars. This will hamper growth in Canada's energy sector even if oil prices eventually rebound, he said.

"Today, everywhere in the world has pulled back on their capital expansion – but nowhere as fast or as deep as Canada."

However, given the combination of lower world oil prices, the effects of environmental and project opposition on investment decisions, and forecasts that production growth in the oil sands sector will end within the next few years, some question whether new pipelines are even required.

On the same day that CAPP released its forecast, the Quebec government said it wants to reduce the province's use of petroleum products by 40 per cent by 2030. University of Alberta energy and environmental economist Andrew Leach, for one, argues that an overbuilt pipeline network could be just as bad as an underbuilt one, and that he would like to see more analysis done by the oil and gas industry to show that more pipelines would result in significantly higher prices for Canadian products.

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