Petroleum show opens with mix of optimism, caution
Some firms show off explosive growth, while many others ‘are in rough shape’
On the heels of a more upbeat drilling forecast, the Global Petroleum Show opened its doors Tuesday amid some optimism the oil and gas industry is in better shape than it was last year, even though recovery has been slow.
The Canadian Association of Oilwell Drilling Contractors reported about 6,800 wells are expected to be drilled in Canada this year, up by nearly 50 per cent over the group’s November forecast.
Mark Scholz, the group’s president, said more oil and gas rigs are back to work after a prolonged rout, but “we’re still in a low-price environment,” with West Texas Intermediate oil trading as low as US$45.56 Tuesday.
Still, there were signs of improvement at the Global Petroleum Show at Stampede Park, Canada’s largest energy exhibition.
Sanjel Energy Services said it plans to hire as many as 150 more workers by the fall to meet growing demand from its oil and gas producer customers, adding to its current workforce of 300 people.
The company rose from the ashes of Sanjel Corp., the largest privately held fracker in Canada. It sought court protection from its creditors last year before selling most of its assets.
Sanjel Energy Services, which has been in business for a year, has found hiring to be a challenge despite high unemployment in Alberta, said chief executive Shane Hooker. Many workers left the industry during the prolonged downturn, while others are hesitant to return while commodity prices remain far below pre-recession levels.
Despite the challenges, Hooker feels optimistic about the industry.
“You feel the vibe or the pulse of the industry right now, versus this time last year; customers are more forthcoming with activity plans this year,” he said.
Mark McNeill, president of the Edmonton oilfield services company Stream-Flo, said he’s seeing “a lot of hesitation” from oil and gas producers, which hire service companies.
McNeill, whose company builds wellheads and other equipment, said producers often tie their activity levels to the price of oil. When the price slips, he said, their spending drops along with it.
“The service companies are in rough shape,” McNeill said.
The Canadian Association of Petroleum Producers said Tuesday the industry’s investment in non-oilsands drilling is expected to hit $29 billion this year, up 45 per cent over last year. Still, it’s well below the $47 billion that drillers invested in pre-recession 2014.
Capital spending in the oilsands, meanwhile, is expected to fall for a third straight year to $15 billion in 2017; it’s a dramatic decline from the $34 billion spent in 2014.
While the downturn hit many service companies hard, some operators fared much better.
Grand Prairie-based Radix Innovation Corp. has enjoyed “astounding success” in the past two years, not a typical experience during a major downturn, said Earl Basnett, vice-president of sales and marketing.
Radix’s flagship product removes frack sand from oil after it’s extracted from the ground to reduce erosion in pipelines and facilities. Sales have skyrocketed from $500,000 in 2015 to $10 million a year later, Basnett said.
“Downturn creates an opportunity for new products to come to life. They need new technology in order to be successful; that’s what allows us to get through those downturns.”