Canada's battered oil producers face a decade of slowing growth and dwindling production, a sharp reversal for an industry once seen as an economic juggernaut.

A key industry forecast on Tuesday cut more than one million barrels per day of future production from the sector's growth trajectory and said investment levels would fall this year by 40 per cent from a year ago – underscoring stark challenges confronting companies already shaken by the prospect of higher royalties and environmental fees under Alberta's NDP government.

The Canadian Association of Petroleum Producers – which represents affiliates of oil giants Exxon Mobil Corp. and ConocoPhillips Co., as well as Calgary-based Suncor Energy Inc. and Cenovus Energy Inc., among others – said in its annual outlook that total Canadian oil production would hit 5.3 million barrels per day by 2030.

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That's up from 3.74 million barrels last year, but 1.1 million barrels per day, or roughly 17 per cent, below expectations of a year ago. At the same time, investment in the oil sands is expected to drop by a third, to $23-billion, from a year ago, with growth rates falling by roughly half in the next decade, according to CAPP.

The numbers reflect an abrupt shift under way in northern Alberta after years of torrid growth, highlighting the shaky prospects for an industry struggling to cope with lower commodity prices, competition from U.S. shale supplies and the threat of new costs imposed in the form of higher carbon levies.

"I think maybe they're getting more realistic," said Jackie Forrest, vice-president at ARC Financial Corp., a Calgary-based private-equity firm. "With the lower price environment, less capital available to oil sands, and competition from other investments like tight oil, I think it's realistic that you assume some of those projects don't move forward."

Oil's skid from more than $100 (U.S.) a barrel last summer to today's level of about $60 has triggered waves of budget cuts and layoffs across the energy sector. The downturn has also accelerated a cost purge in the oil sands, as companies scramble to reverse years of runaway inflation.

"You can't keep going up by 10 per cent a year under flat prices and still be economic," Greg Stringham, CAPP's vice-president of oil sands and markets, said in an interview. "They've had to redouble their efforts to ensure the economics are there for the future."

The industry's fortunes are taking a hit as Alberta Premier Rachel Notley's government considers a potential review of energy royalties, as well as an overhaul of rules aimed at curbing greenhouse-gas emissions. The province is set to unveil new climate regulations by the end of the month, a move that could lead to higher fees for major industries such as oil sands.

Some of the sector's largest players have warned against the imposition of new costs at a time of depressed energy markets. But others have urged the government to act quickly, saying carbon pricing may help smooth the way for contentious pipeline expansions touted as key to tapping richer global markets.

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The industry insists those projects, including TransCanada Corp.'s Keystone XL and Energy East lines, are needed, despite the diminished production outlook. Led by the oil sands, overall output is poised to climb to 4.6 million barrels per day by 2020 – the result of investments made years before oil prices hit the skids, CAPP said.

However, the industry forecast also maps out a future in which production from the northern Alberta resource plateaus at just above 3 million barrels per day by the middle of next decade – a scenario that reflects heightened uncertainty over future growth plans.

Mr. Stringham acknowledged that could impact the timing of certain pipeline proposals. "But at the end of the forecast we still need the capacity associated with them all," he insisted.