Canadian drilling to increase in 2018; 'muted stability' may return
November 21, 2017
Market conditions remain fragile for Canadian drilling and service contractors despite an expected increase in activity next year, according to the Canadian Association of Oilwell Drilling Contractors (CAODC).
CAODC released its 2018 drilling forecast on Tuesday, expecting 6,138 wells to be drilled next year, up from 6,031 in 2017.
he bump in numbers aside, CAODC called out the challenges facing Canadian oil and gas — including the pressure that service and supply companies are under to keep rates low.
Two major energy infrastructure projects—the Pacific NorthWest LNG plant and the Energy East pipeline—have been cancelled in the past six months and the federally-approved Trans Mountain pipeline to the west coast has been delayed, the association noted in a statement.
"The cancellations of key energy infrastructure projects, and further delays to those already approved, send a message to potential investors that Canada’s rules and regulations around these projects are subject to continuous change at a moment’s notice,” said CAODC president Mark Scholz.
While there are signs that the drilling and service rig market has bottomed out, CAODC says that meaningful upward movement of day rates remains a struggle.
“Right now our members are offering a premium product for discounted rates just to survive,” Scholz said.
The CAODC statement continued that, “After a sustained period of low to no cash flow and an exodus of investment from the WCSB, drilling and service contractors are challenged with finding the capital to adequately maintain equipment and reinvest back into their businesses. As such, industry conditions remain fragile.”
In 2018, CAODC is hopeful that “a muted stability” may return for its member companies.
“What we need most is the optimism a strong investment climate will create,” Scholz said.
Story: JWN Energy