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A tar sands processing plant near Fort McMurray, Alta., is pictured in this file photo taken Sept. 17, 2014.TODD KOROL/Reuters

Canada's oil industry expects to continue struggling until prices rise significantly toward the end of 2016, after which production and investment – at least in conventional oil fields – will ramp up quickly.

"We expect prices will recover by the end of the year, but being that they are so low for the first half … activity will be lower," said Jackie Forrest, vice-president of ARC Financial Corp., in a meeting of oil executives with The Globe and Mail editorial board at an investment conference in Toronto. At the moment, "there just isn't enough money being generated by the oil and gas industry after they pay all their expenses to really invest," she said.

Drilling is now at the same level as it was in 1972, when the industry was half the size it is now, she said. Capital spending is expected to fall this year by 62 per cent from 2014 levels, with tens of thousands of jobs lost.

Even when prices rise, the industry will hesitate to invest in long-term megaprojects, Ms. Forrest said, because of concerns that prices will remain volatile. That means the pace of investment in the oil sands will be slower than in the 2011-14 period, although there will be spending to maintain existing production. Other parts of the business, however, will see "very fast renewed investment" once prices rebound, she said.

In the meantime, "for a lot of companies in Canada, it is just about hanging on right now," said Brian Schmidt, chief executive officer of Tamarack Valley Energy Ltd. "Very few plays work at today's oil prices. Bank debts are at all-time highs … there is a lot of pressure on companies." Some firms can make money at current prices if they have low cost operations, but many need oil above $50 (U.S.) a barrel to stay above water.

The price of West Texas intermediate crude rose above $42 Tuesday on reports that international producers may agree to an output freeze at meetings this weekend. It has traded as low as $26 in recent months.

The industry needs help from government, Mr. Schmidt said, and the best support would be to approve new pipelines. Getting access to new markets – in Eastern Canada or overseas via the West Coast – would help reduce the gap between world prices and what Canadian producers get for their product, while generating a broader economic fillip, he said.

"There is private sector capital ready to go and build pipelines [that would] put people to work right now and take care of the price differential that we have on our product," Mr. Schmidt said.

More pipeline capacity, and the resulting market diversification, would put $5 to $7 a barrel more into the pockets of oil-producing firms, money that would go to drilling and other job-creating activities, he said. "Pipeline access now is more critical than it was when oil was $80 to $100 a barrel." Over all, he said, approving pipelines "is the quickest and easiest way to give the oil industry a kick-start and put people back to work."

Scott Saxberg, CEO of Crescent Point Energy Corp., warned that without new pipelines, the amount of oil being moved by rail is going to rise dramatically when prices improve and production ramps up. "All these barrels are going to move no matter what. If oil goes to $100 and all those projects get put back on … those barrels are going to go on rail."

That is "so inefficient and so environmentally the wrong direction to go," he said, "and we are choosing that path right now." Pipelines, by contrast, are the most efficient way to transport the oil that the world needs, he added.

Mr. Saxberg said talk that Canada could completely eliminate the use of fossil fuels in the coming decades is premature. "We need the energy. You need to heat your house. You need to build products. Nothing is going to change that in the short term and in our lifetimes," he said.

At the same time, carbon taxes are a problem in Canada because they harm the industry relative to the United States players, he said. "If all the U.S. guys put on a tax, no problem. … We just want to have the same consistent business parameters to compete with all our competitors."

Ms. Forrest said even a sharp shift toward renewables will not eliminate the use of oil over the next quarter century, and gas consumption will likely increase in any event. "We can't transition off fossil fuels that quickly," she said.