First oil

At the beginning of this month, SPE hosted its Annual Technical Conference and Exhibition in Calgary, Alberta, Canada, for the first time ever. By all appearances, the event came off well, and attendees seemed pleased. Most attendees (except those that flew up from Houston’s endless summer) were unfazed by the early snowfall that began on Friday, Sept. 27 and kicked into high gear on Sunday, Sept. 29, before tailing off the next day. Accumulations ranged from 6 to 10 in. around Calgary, accompanied by temperatures that remained at or below 32°F until Tuesday afternoon.

SPE should be pleased with the attendance at ATCE. The final, official figure came in at just over 6,000. This is a solid 1,000 persons higher than SPE’s original prediction of a shade over 5,000. And there were 276 exhibiting companies from 47 countries, so there was plenty of technology to explore during the three days.

State of the Canadian market. All that having been said, the Canadian E&P sector remains extremely fragile, and you didn’t have to go far in the exhibition hall or among the technical sessions to find someone who would confirm how bad things remain. It’s bad enough, that a number of service/supply firms have either decided to, or are considering, opening offices in Houston. The rationale is that the only way that they are going to be able to increase their business is by greater participation in the U.S. market.

Several factors have brought the Canadian market to this weak position, not the least of which is underperforming commodity prices. But it goes far beyond that, to mostly governmentally created problems, like a carbon tax; an inability to build badly needed, new pipeline capacity; the federal regime’s apparent refusal to assert jurisdiction in pipeline matters; and federal lawmakers’ passage of Bills C-48 and C-69, which complicate any further expansion of Canada’s production, as well as transportation of such output.

Some of the folks we talked to at SPE’s ATCE are hoping that Canada’s national election on Oct. 21 will result in a new Conservative Party administration taking over, which would be far more receptive to helping the upstream sector. But they also were quick to say that even if there is a change in Ottawa, they don’t expect any positive effects for at least several months.

A visit with our friends at the Canadian Association of Petroleum Producers (CAPP) was equally sobering. As the CAPP folks noted, Canada’s rig count was at just 127 units on Sept. 27, down 51 rigs, or 29%, from the same week in 2018. And their mid-year revised forecast (which we utilize) calls for just 5,220 wells, down a whopping 21% from 2018’s well total of 6,641, which was already 4% lower than the 2017 figure of 6,913. And with no additional pipeline additions in sight, Canadian oil production has settled into a plateau this year, at around 4.2 MMbpd to 4.3 MMbpd. Our CAPP friends said that they see nothing on the near-term horizon to alter the current E&P activity level.

We lost a good one. It is with great sadness that we report the passing of one of our veteran contributing editors, Ron Bitto. Ron passed away quite unexpectedly on Sept. 30 after a brief illness. He was 67. After a long career in the service/supply sector, Ron, over the last nearly six years, had embarked on a successful second career in consulting and contract writing. Indeed, he was a steady source of material for World Oil, having authored a monthly column for a number of years, as well as writing a number of regional reports and other articles for us. Ironically, his last work for World Oil is the Middle East/North Africa report, on page 58 of this issue.

What folks may not know is that Ron was a graduate of Harvard University and had a keen analytical mind. Also, he had a quiet but stout sense of humor that could suddenly leap out and surprise you. What I appreciated most in Ron was that he was a straight shooter, who was always true to his word—he was ever-dependable. We are going to miss him immensely at World Oil. 

About the Authors

Kurt Abraham

World Oil

Kurt Abraham kurt.abraham@worldoil.com