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Canada oil well drilling to contract again in 2016 -industry body

Published 2015-11-18, 01:09 p/m
© Reuters. Canada oil well drilling to contract again in 2016 -industry body
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By Nia Williams
CALGARY, Alberta, Nov 18 (Reuters) - The number of oil wells
drilled in Canada will shrink further in 2016, the Canadian
Association of Drilling Contractors said on Wednesday, as the
prolonged slump in global crude prices take its toll on the
oilfield service sector.
The Calgary-based industry body expects 4,728 wells will be
drilled next year, down 15 percent from its 2015 forecast and a
drop of 58 percent from the 11,226 wells drilled in 2014.
U.S. benchmark crude prices have plunged more than 60
percent since June 2014 to trade around $40 a barrel CLc1 , and
many industry observers expect the weakness to persist into next
year and beyond.
Drilling companies including Western Energy Service Corp
WRG.TO and Trican Well Service Ltd TCW.TO have been hardest
hit as producers drastically scale back spending on new wells
and aggressively negotiate lower contract rates.
Operating days in 2016 are expected to fall to 56,260, down
57 percent from 131,021 in 2014. Mark Scholz, President of the
CAODC, said the active rig count for the western Canadian fleet
will be about 160, the lowest since 1983.
Rig utilization levels are forecast to average 22 percent
for the year, the lowest since CAODC began recording the data in
1977. Job losses in the drilling industry since 2014 are
expected to hit around 28,500.
"The scale and magnitude of this downturn is quite frankly
worse than the 1980s because the number of drilling contractors
in business is much higher," Scholz said, adding that
uncertainty around royalty rate and climate change policy
reviews in Alberta was making the situation worse.

(Editing by Alan Crosby)

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