International: Canadian outlook ///

Notwithstanding a substantial reduction in natural gas prices and some minor softening of oil prices, the Canadian industry set more records in 2006. This performance was highlighted by new high-water marks for drilling and land sales. OVERVIEW Even with the pricing downturn—oil is trading at C$63.50/bbl (about US$54, compared to C$70.80 in January 2006) and natural gas is at C$6.70/Mcf (versus $8.70)—there was enough optimism that the word “boom” once again slipped into the common parlance. Even now, that confidence seems reasonable. With gas prices off slightly, industry shifted its focus to more oily prospects. Even at C$60/bbl (US$51/bbl), most oil projects are economical. And industry has been riding a wave that really began in 2003—the first of four consecutive record years. Most forecasters project continued strong demand and high prices for many years to come.

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