Oil, gas drilling contractors in U.S. optimistic about prospects
2017 outlook more buoyant in Canada too but still short of full recovery
Donald Trump’s presidency in the United States presents a competitive threat to Canadian drilling companies and domestic energy producers, Canada’s drilling association said Tuesday as it released an improved outlook for next year.
Canadian Association of Oilwell Drilling Contractors president Mark Scholz said that a boost in drilling activity in the U.S., aided by the rollback of U.S. President Barack Obama’s environmental regulations under president-elect Trump, could cause American oil and gas production to increase sharply. As a result, Scholz said, “It would temper growth prospects in Canada.”
“It is absolutely a serious threat and we have to take it seriously,” Scholz said.
He added that Canadian governments should reconsider how environmental policies like carbon taxes here will affect the domestic energy industry’s competitive position relative to the U.S. under Trump.
“If I was a U.S. driller, I would be very optimistic about the prospects of greater activity in the United States,” Scholz said.
Scholz made the comments on carbon taxes and the need for new pipelines to move western Canadian oil to the west and east coasts after releasing his organization’s activity forecast for 2017, which showed a slight improvement next year for the energy industry following a brutally challenging two years of low oil prices.
Drilling companies in Canada are forecast to drill 4,664 wells in 2017, which would mark a 31 per cent improvement over the 3,562 wells to be drilled by the end of 2016.
“Activity is moving in the right direction but we’re still in a depressed and desperate economic environment,” Scholz said.
The projected well count for 2017 is still a 58 per cent decline from the number of wells drilled in 2014, when crude oil prices began their prolonged collapse.
The CAODC has said that declines in oilfield drilling activity have resulted in 120,000 direct and indirect job losses over the past two-and-a-half years.
The association now projects the slight uptick in drilling activity will result in 3,000 new jobs over the course of the next year.
Alberta’s unemployment rate has increased steadily since the oil price collapse began in 2014, from 4.6 per cent in July 2014 to 8.5 per cent in October.
The unemployment rate in Calgary, the province’s biggest city, hit 10.2 per cent in October.
In recent months drilling companies have begun hiring back laid off personnel, but not enough to offset the tens of thousands of layoffs from the preceding years.
Precision Drilling Corp., Canada’s largest driller, announced during its third-quarter earnings call that it had rehired 1,000 people between Canada in the U.S. as a result of an increase in oilfield activity.
Other oilfield service companies, like Essential Energy Services Ltd., and Trican Well Service Ltd., which also cut staff during the downturn, rehired some workers in Alberta during the third quarter as oilfield activity began to recover.