Big driller hires 1,000; are more jobs on way?
Upcoming OPEC meeting could add greater stability
Is the glass half full, a quarter full, or almost empty?
For Canada’s hard-hit oilfield services industry, perspective is everything.
News that Precision Drilling Corp. hired 1,000 people recently put a positive buzz through the province as Canada’s largest driller signalled it sees an uptick in work coming down the energy pipeline in 2017.
For drillers and other companies in the energy services sector, it’s a sliver of good news, even if it’s only one company adding staff.
“Customer sentiment has turned substantially more constructive when compared to any of the time in the last two years,” Precision CEO Kevin Neveu said during a conference call Friday.
“The key take-away is that this is the first time in two years that our customers are even talking about increasing activity, not how quickly can we lay the rigs down. I think it’s a very bullish signal.”
An upturn in oil prices above US$50 a barrel in the past month, and the realization the bottom is likely behind the sector, is driving some of the positive momentum.
A deal at next month’s OPEC meeting could provide further stability in oil markets. Some Canadian petroleum producers have already telegraphed they will increase their capital budgets for 2017.
Neveu noted Precision has reactivated 37 rigs in Canada and 16 in the United States “in the early stages of this rebound.”
About 70 per cent of the 1,000 recent hires were previous employees, while the remainder were new staff.
Precision isn’t alone in seeing some daylight ahead.
Predator Drilling Inc., for example, is looking for about 150 new workers in the next couple of months as it increases its ranks for the winter drilling season.
The Red Deer company, with 27 rigs and about 130 employees, is seeing work pick up in the oilsands, parts of Saskatchewan and the Montney area.
It just mobilized its first rig in the Permian Basin in Texas.
“We’ve got more opportunities in front of us this winter. And so just to stay ahead of that game and cycle, if you will, we’ve been looking for people,” CEO Shane Walper said Monday.
“I definitely believe the level of optimism is higher than it has been.” Much of this sounds hopeful. But at the risk of being a wet rag, there’s plenty of sobering news to consider.
The service sector that has been bulldozed by big losses, brutal downsizing, tough competition and fierce pricing pressure.
Only 21 per cent of the country’s 671 rigs are working this week. While that’s up from eight per cent in early July, it’s a far cry from the 47 per cent of rigs that were active in the third quarter of 2014.
In September, the Canadian Association of Oilwell Drilling Contractors lowered its well forecast for the year to just 3,562, making it the worst year since the industry group started tracking data almost four decades ago.
In turn, the Canadian fleet is expected to shrink by 87 units to 671 drilling rigs this year, while related employment since 2014 has fallen by 34,500 jobs.
“I wouldn’t be getting too excited yet,” cautioned CAODC vice-president John Bayko. “For our members, it’s going to be a slow recovery when it does begin — and I’m not sure it has begun.”
Precision noted its drilling activity in Canada during the third quarter fell 37 per cent from the same period in 2015, and it posted a net loss for the quarter of $47 million.
Neveu was quick to caution that customers are considering a wide range of oil and gas price scenarios for the coming year.
“Our customers are going to be very responsive (to) commodity prices. So if commodity prices waver, this momentum falls out — and falls out quickly,” he added.
Finally, many skilled oilpatch workers have left the province and returned home to other places in Canada, finding jobs in other industries.
As odd as it sounds with Alberta’s unemployment rate stuck at 8.5 per cent, there are lingering concerns about companies finding enough skilled employees when the sector eventually does rebound fully.
“It’s been a two-year downturn so people have moved on with their lives,” said Mark Salkeld, president of the Petroleum Services Association of Canada, which represents the oil industry’s service, supply and manufacturing sectors.
“They aren’t coming back. They’ve got other careers. They’re frustrated, they are fed up and we won’t ever see them again. We will get a percentage who will come back ... the rest is going to be new hires.”
For a pessimist, there’s still a lot of financial pain for the sector to manage and choppy waters ahead to navigate. For an optimist, there are 1,000 more people in the oilpatch — some in Canada, some in the United States — now collecting a paycheque.
“We’ve had some bad news for so long, it’s just nice to be able to say, ‘Hey, it’s great at least some people are getting the chance to go back to work,’ ” Bayko added.
“I think people are just desperate to be able to finally say, at least there’s something positive going on.”