Canada’s oil and natural gas drilling fleet will shrink in 2020 by 9% to 497 rigs from the current total of 545, according to the Canadian Association of Oilwell Drilling Contractors (CAODC).
“It has been another extremely difficult year for our members,” said President Mark Scholz in releasing the 70 year-old trade association’s bleak annual fall field activity projection.
The forecast said investor “sentiment toward Canadian oil and gas is nearing all-time lows” because of stalled pipeline projects and strict environmental policing enacted by the federal Liberal government this summer.
“Attacks from foreign-funded radical environmental groups and punitive policy measures from our own federal government have caused Canadian oil and gas families to suffer unnecessarily,” Scholz said.
The Liberal victory in the national election last month worsened the outlook, according to the industry group. “Since 2017, the industry has lost an estimated C$30 billion ($22.5 billion) in foreign capital,” or annual investment in Canadian fossil fuels, “and companies continue layoffs and relocation efforts.”
The latest Canadian industrial casualties recited by the CAODC include relocations, chiefly to the United States, of 29 high technology drilling rigs and multiple well servicing units and crews.
The exodus continues a trend recorded in fall financial statements of Calgary-based CAODC member firms with international operations, such as Ensign Energy Services Inc. and Precision Drilling Corp.
Ensign said its 118 Canadian drilling rigs only earned 17% of its 3Q2019 revenues, while its 134-strong U.S. fleet accounted for 64%. Precision currently fields 72 rigs in the United States, or 70% more than the 42 units in Canada.
If an “environment” is not created where the Canadian oil and gas industry “can compete internationally, we won’t have an industry left in this country,” Scholz said.
The CAODC called for repeal of the new federal Liberal environmental legislation, completion of delayed pipeline projects, and the Alberta government helping beyond recently announced exemptions from provincial oil production quotas.
Last month the Petroleum Services Association of Canada predicted in its annual forecast that the country’s drilling would decline in 2020 to 4,500 wells, down by 500 (10%) compared with 2019. The projected well count would only be 43% of the 10,390 wells in 2014 before gas and oil prices fell. The slump foreseen next year would cut activity back toward the Canadian industry bottom of 3,744 wells in 2016.