Oil-drilling activity in the West is facing no-growth scenario
Drilling activity in Western Canada is expected to remain flat over the next year as drillers believe oil and gas sentiment is nearing an “all-time low” in the face of fresh forecasts that predict weak Canadian industry growth over the longer term.
The Canadian Association of Oilwell Drilling Contractors’ annual activity forecast released Wednesday predicted there will be 13,731 direct and indirect oilfield jobs losses next year.
The association has said its member companies have already moved 29 drilling rigs to the United States “in order to find work and generate cash flow” and those rigs include the larger, higher-technology rigs used to drill deep, horizontal wells in new formations in Western Canada.
“It has been another extremely difficult year for our members,” CAODC president Mark Scholz said in a release accompanying the forecast. “If we do not create an environment where the oil and gas industry can compete internationally, we won’t have an industry left in this country.”
The association is forecasting that 4,905 wells will be drilled next year, nine more than last year, but statistically flat over current activity levels.
The bleak outlook comes on the heels of yet another forecast for anemic growth in the Canadian industry. In its World Energy Outlook published Wednesday, the International Energy Agency predicted Canadian oil production would grow just 0.5 per cent — or 600,000 barrels per day — over the next 20 years to six million bpd.
The IEA’S forecast is a sharp reversal from previous forecasts, which had predicted more supply growth from Canada, the U.S. and Brazil.
U.S. oil supplies are projected to grow by 1.1 per cent, or four million bpd, to 19.8 million bpd by 2040.
The IEA outlook also forecasted that global demand for oil under two different scenarios would peak around 2030, earlier than the organization had predicted previously.