The board's summer outlook for the Canadian oil-extraction business forecasts that crude prices driven south by the economic downturn will slash pre-tax profits for Canadian producers by 24% from the record $15.3-billion in 2008 to $11.6-billion in 2009.

But as the U.S. economy recovers, rising oil demand will lift prices to the point that Canada's expensive and controversial oil sands projects become profitable again, said board economist Todd Crawford.

"The Canadian oil industry has long been a boom or bust industry, and that has been the case over the past year ... but stimulus packages around the world will lead to improved performance starting in 2010.

"Accordingly, oil prices will resume their long-term upward trend, eventually reaching US$103 by 2013. Surging revenue growth related to higher prices will result in profits topping US$32-billion by the end of the forecast," he added.

Moreover, the resumption of delayed oil sands projects and production increases at existing oil sands facilities will boost output from non-conventional sources from today's 1.22 million barrels a day to 2.4 million barrels a day by 2013, Mr. Crawford forecasts.

The Obama administration's apparent distaste for Alberta's environmentally challenged oil sands has cast a cloud over the sector's future. But PetroChina's $1.9-billion investment this week in a private oil sands player showed the world is still ready to beat a path to the country with the world's second largest oil reserves outside of Saudi Arabia.

It also changed the tone out of Washington, which suddenly became concerned about China's participation in the sector. Canada is currently the largest supplier of oil to the United States and will become the world's sixth-largest producer by 2015, according to the Canadian Association of Petroleum Producers.

Surpassing an average break-even point of $80 will spur new or additional output from Imperial Oil's Kearl Lake project, Opti/Nexen's Long Lake project and the Horizon project run by Canadian Natural Resources, among others, Mr. Crawford said.

Producers will benefit from the recent drop in material and labour costs, although those inputs are expected to rise again quickly once projects ramp up.

While output from conventional wells will continue to fall along with production from offshore Newfoundland, oil sands growth will boost Canadian totals to 3.5 million barrels a day by 2013, the study said.

Revenues will subsequently more than double from the $93-billion forecast for 2009 to $209-billion in 2013. And profits will nearly triple from 2009's forecast of $11.6-billion to $32-billion in 2013, Mr. Crawford said.