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CAODC releases sombre oil and gas drilling forecast


November 19, 2015
By Ground Water Canada

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Calgary – The Canadian Association of Oilwell Drilling Contractors forecast for 2016 reflects the dramatic downturn deeply impacting the oil and gas services industry and projects a decrease of 58 per cent from 2014 in the number of wells drilled.

Low commodity prices, market access challenges, and cumulative regulatory and taxation changes have combined to create an investment climate that is resulting in uncertainty in Canadian markets, the Canadian Association of Oilwell Drilling Contractors (CAODC) said in a news release. Escalating costs in the Western Canadian Sedimentary Basin have prompted operators to explore options outside of Canada, the association said.

Current activity levels suggest a significant de-listing of assets by member companies moving into Q1 2016. Active rig counts are down significantly in Q4 2015, with utilization rates cut in half. CAODC predicts this trend to continue throughout all four quarters in 2016, with utilization levels averaging around 22 per cent for the year. CAODC projects the number of wells drilled in 2016 at 4,728, a decrease of 58 per cent from 2014 (11,226).

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The association projects operating days at 56,260, a decrease of 57 per cent from 2014 (131,021). Rig fleet numbers are expected to contract by 62 (758 drilling rigs to 696 drilling rigs). CAODC also forecasts a 57 per cent decrease in employment from 2014 levels (-28,485 jobs).

“Today, the oil and gas services industry is facing one of the most difficult economic times in a generation. The active rig count for the western Canadian rig fleet is at the same level as experienced in 1983, one of the worst periods in our history,” CAODC president Mark Scholz said in the release. “In order to achieve a healthy oil and gas industry, government must ensure its fiscal policies are competitive, predictable and consider the cumulative costs of doing business.”