File photo by THE CANADIAN PRESS                                In a report that forecasts lower second-quarter revenue for most Canadian operators in the industry, RBC Dominion Securities analysts say they’ve cut their 2019 rig activity and well counts for this year by between six and eight per cent and in 2020 by five to six per cent.

File photo by THE CANADIAN PRESS In a report that forecasts lower second-quarter revenue for most Canadian operators in the industry, RBC Dominion Securities analysts say they’ve cut their 2019 rig activity and well counts for this year by between six and eight per cent and in 2020 by five to six per cent.

Drilling forecast goes from bad to worse after slow start to summer deployments

CALGARY — The Canadian oilfield services sector is expected to continue to suffer as it enters the summer drilling season despite recent developments such as the approval of the Trans Mountain pipeline expansion and the election of a conservative government in Alberta.

In a report that forecasts lower second-quarter revenue for most Canadian operators in the industry, RBC Dominion Securities analysts say they’ve cut their 2019 rig activity and well counts for this year by between six and eight per cent and in 2020 by five to six per cent.

They say the reduction reflects a slow start to the third quarter last month due to wet weather in Western Canada, along with lower producer spending due to softer commodity price forecasts and continued oil production curtailments in Alberta.

The downgrade reflects what is being seen throughout the industry these days thanks to a lack of investor confidence in Canadian energy, said John Bayko, vice-president of communications for the Canadian Association of Oilwell Drilling Contractors.

“I think it has a lot to do with policy,” he said Tuesday, citing Ottawa’s recent approvals of Bill C-69 to revamp the way energy projects are approved and Bill C-48 to ban oil tankers off B.C.’s northern coast.

“We just haven’t seen any commitment to this industry in this country that would cause people to think there’s a long-term plan for it.”

There were 146 drilling rigs working or moving in Canada on Thursday out of an available fleet of 547 rigs, he said, compared with an average in July 2018 of 264 rigs.

At about 135 jobs per rig, that means there are nearly 16,000 fewer people working in the industry now.

Many Canadian oilfield workers have left the profession, Bayko said, but some are working in the United States because a total of at least 29 Canadian drilling rigs have been moved there since 2017.

“We’ve seen a considerable loss of talent … whether it’s to the United States through some of our high-spec rigs moving down there or just people moving on to other industries and not coming back to the (oil)patch,” Bayko said.

“We haven’t had steady work, whether on the drilling or the services side, for coming on five years here.”

Springtime is normally the slowest season for the Canadian drilling sector because the melting landscape makes it difficult to move heavy equipment into backcountry locations.

The average western Canadian rig count for the three months ended June 30 was 90, down 23 per cent from the same period in 2018, RBC noted.

It pointed out drilling in Alberta, traditionally the most active province, matched that decline while B.C. was up slightly year-over-year and Saskatchewan was flat.

“The divergence potentially highlights the impact of oil production curtailments, which it seems some producers have addressed through natural declines, in our view,” RBC said in its report.

Alberta enacted the program to cut oil output starting in January to support crude prices. The cuts have been gradually reduced but Alberta Premier Jason Kenney has said they may need to continue into 2020 if storage levels in the province remain high.

Precision Drilling starts the parade of second-quarter results from Canadian oilfield services companies on Thursday.

In its first-quarter report, it said it was relying on its U.S. operations for growth as its Canadian branches were generating a historic low of just 36 per cent of overall revenue.

drilling forecast

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta has 3,651 active cases of COVID-19.  (File photo)
Gov’t reports two more COVID-19 deaths in Red Deer on Sunday

Nineteen new deaths, including two in Red Deer, were reported by the… Continue reading

Andre Lemus, the owner of Las Palmeras in Red Deer, says he hopes in-person dining restrictions are lifted this upcoming Thursday. (Photo courtesy www.laspalmeras.ca)
Red Deer restaurant owner hopes in-person dining restrictions are lifted Thursday

The owner of a Red Deer restaurant says business has “dropped” since… Continue reading

The Town of Ponoka and the Alberta Union of Provincial Employees (AUPE) have ratified a new agreement, averting a strike. (File photo from Facebook)
Alberta gov’t ‘using pandemic as shield to lay off workers,’ says AUPE

The Government of Alberta’s “attacks on workers” is continuing with a new… Continue reading

Rocky Mountain House RCMP, EMS, Search and Rescue, STARS air ambulance and Alstrom Helicopters worked together to rescue a fallen ice climber Friday. (Photo contributed by Rocky Mountain House RCMP)
Rocky Mountain House RCMP help rescue fallen ice climber

Rocky Mountain RCMP helped assist a fallen ice climber Friday afternoon. At… Continue reading

Dwayne Buckle, 40 of Red Deer finished a 1,638-kilometre walk, in honour of his family. The 12-week, 82 day-journey wrapped up in Port Hardy, B.C. on Monday. Facebook photo
Red Deer man completes 1,638 km hike for cancer research

Dwayne Buckle, a Red Deer firefighter returned home Friday after his 12-week journey

A cat named Willow is shown in this recent handout photo. Victoria firefighter Capt. Tim Hanley says using a jackhammer and other home repair tools to save a cat stuck in a tiny basement drainpipe ranks as the strangest rescue call he's been on in his 20-year career. Hanley says he and three other firefighters spent more than two hours using sledgehammers and a jackhammer to break through Victoria homeowner Emma Hutchinson's concrete basement floor to free Willow, a nine-month-old kitten. THE CANADIAN PRESS/HO - Twitter, City of Victoria
Victoria firefighters use homeowners’ jackhammer to rescue cat trapped in tiny pipe

VICTORIA — A Victoria firefighter says using a jackhammer and other home… Continue reading

Conservative Leader Erin O'Toole holds a press conference on Parliament Hill, in Ottawa on December 10, 2020. THE CANADIAN PRESS/Sean Kilpatrick
No place for ‘far right’ in Conservative Party: O’Toole

OTTAWA — Federal Conservative Leader Erin O’Toole says there is “no place… Continue reading

Alberta Energy Minister Sonya Savage addresses the attendees while Tom Olsen, Managing Director of the Canadian Energy Centre, looks on at a press conference at SAIT in Calgary on Wednesday, Dec. 11, 2019. THE CANADIAN PRESS/Greg Fulmes
‘Morally and ethically wrong:’ Court to hear challenge to Alberta coal policy removal

First Nations, ranchers, municipal officials and environmentalists hope to persuade a judge… Continue reading

Sub-Lt. Jeffrey Delisle arrives at Nova Scotia provincial court for a sentencing hearing in Halifax on Friday, Feb. 1, 2013. THE CANADIAN PRESS/Andrew Vaughan
Canada’s spy-catching system caused delay, angst in Delisle case: former FBI official

OTTAWA — The U.S. Federal Bureau of Investigation’s former head of counter-intelligence… Continue reading

People wait to be screened before entering Little Mountain Place, a long-term care home that has had 41 residents die since a COVID-19 outbreak was declared at the facility in November in Vancouver on Sunday, January 3, 2021. Staff in long-term care homes across Canada are struggling to isolate elderly residents with dementia during COVID-19 outbreaks, accelerating the deadly spread of the virus, experts say. THE CANADIAN PRESS/Darryl Dyck
Care home staff struggle to isolate dementia patients during outbreaks: experts

VANCOUVER — Staff in long-term care homes across Canada are struggling to… Continue reading

A passer by walks in High Park, in Toronto, Thursday, Jan. 14, 2021. This workweek will kick off with what's fabled to be the most depressing day of the year, during one of the darkest eras in recent history. THE CANADIAN PRESS/Chris Young
‘Blue Monday’ getting you down? Exercise may be the cure, say experts

This workweek will kick off with what’s fabled to be the most… Continue reading

Winnipeg Jets' Blake Wheeler (26) just misses the net against goaltender Laurent Brossoit (30) during  scrimmage at their NHL training camp practice in Winnipeg, Wednesday, January 6, 2021. THE CANADIAN PRESS/John Woods
Jets return to practice a day after suspending workouts due to COVID concerns

WINNIPEG — The Winnipeg Jets have returned to practice a day after… Continue reading

Most Read