The Canadian oil and gas industry's productivity record is bad, and a new study finds it worsened significantly during the run-up in crude price in recent years.

But don't blame the oil sands, the fastest-growing source of crude in Canada. Productivity – a measure of how efficiently goods are made – is actually getting much better in Alberta's oil sands, according to a study being released Monday by economists Andrew Sharpe and Bert Waslander of the Ottawa-based Centre for the Study of Living Standards.

"The robust labour-productivity growth in non-conventional oil production [is] a very promising and little-known development," the authors said, adding that it "bodes well" for the future productivity in the oil patch.

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New methods of getting at bitumen, including injecting steam deep underground to extract oil from sand, are allowing producers to boost output with fewer workers, concluded the study, contained in the latest issue of the International Productivity Monitor. The industry, which has a high incentive to cut costs, may also be getting much more efficient at extracting oil, simply through "learning by doing," the authors added.

Labour productivity in the unconventional oil and gas industry – primarily Alberta's oil sands – surged an average of 10.7 per cent a year between 2007 and 2012. Productivity went the other way in the conventional sector, declining an average of 10.3 per cent a year over the same period.

The result is that productivity in the entire oil and gas industry declined 6.4 per cent a year between 2000 and 2012 – a performance the authors characterized as "dismal."

The decline is "entirely driven" by conventional producers, who are responsible for roughly two-thirds of Canada's oil and gas output.

The main reason for the divergent paths of the two segments of the industry is manpower. Conventional production declined nearly 15 per cent between 2007 and 2012, but the workforce grew from 34,600 to 49,200.

Meanwhile, unconventional producers are getting more oil and gas with fewer workers. Output grew 53 per cent from 2007 to 2012, but employment dropped to 16,300 from 18,200.

The report points out that productivity in the conventional sector is declining because each new barrel of crude or cubic meter of natural gas is more difficult to exploit and, until recently, high oil prices have made it "profitable to exploit lower quality, and hence higher cost" deposits.

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Among other key findings: