Canadian operators seen boosting drilling next year

11/22/2016

CALGARY, Alberta -- The Canadian Association of Oilwell Drilling Contractors (CAODC) has released its 2017 drilling forecast.

According to a statement on the association's website, CAODC is projecting that 4,665 wells—an increase of 1,103 from 2016 (3,562)—will be drilled next year. Meanwhile, operating days are projected to reach 48,980—an increase of 8,577 from 2016. The rig fleet is expected to decrease by 55 to 610.

“After record low utilization rates in 2016, it would be difficult to suggest 2017 could be anything but better. Weak commodity prices coupled with abnormal political and social factors, has led to sustained challenges for the industry. While the price of WTI is projected to stabilize somewhat, continued uncertainty surrounding pipeline infrastructure, and a looming price on carbon, continue to push Canada to the back of the line with respect to long-term investment,” CAODC said.

After 24 months of record-low activity, hundreds of thousands of layoffs, and an exodus of skilled labour, CAODC President Mark Scholz questioned the timing and effectiveness of recent policy decisions that would make the Canadian oil and gas industry even less attractive. “We continue to urge our governments at both the provincial and federal level to consider the impact of a carbon tax and lack of pipelines on the people and families in our industry. Canadians expect their government to attract jobs and investment during difficult economic times, not push them away,” said Scholz.

CAODC sees low activity continuing through all four quarters in 2017, with a modest improvement in the number of wells drilled. The forecasted rig count will remain near historical lows but the well count is predicted to be slightly higher in Saskatchewan.

“We are expecting a 4% increase in rig utilization with a rig fleet that continues to decrease. Activity is moving in the right direction, but we’re still in a depressed and desperate economic environment,” cautioned Scholz.

Scholz also emphasized the same point made in last year’s forecast regarding the important role provincial and federal governments play in these difficult times. “In order to achieve a healthy oil and gas industry, governments must ensure its fiscal policies are competitive, predictable, and consider the cumulative costs of doing business in Canada versus other global jurisdictions.”

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