Positive drilling forecast for Canada after year of hell in services sector

first_imgThe Petroleum Services Association of Canada is calling its latest oil and gas drilling forecast a pleasant outcome after a year of ‘hell’ for oilfield services in 2016.In its latest forecast for 2017 Thursday in Calgary, PSAC announced it is now projecting 6,680 wells to be drilled in Canada, a 60 per cent increase from its original forecast back in November.It’s certainly an improvement from the totals of 5,400 in 2015 and just under 4,100 last year.However, it’s a far cry from 2012-2014, each year with over 11,000 wells.President and CEO Mark Salkeld said it was certainly more than expected.“It was just a good indication of how quickly this area can bounce back when required,” he said.Unlike the November forecast, Alberta will take back the lead in drilling at almost half of the projected wells, followed by Saskatchewan which was in front in the original projection.Along with Salkeld’s presentation to companies and other stakeholders, he was joined by Jon Morrison, CIBC Executive Director of Institutional Equity Research – Oilfield Services at CIBC World Markets.Morrison labelled 2016 as “The Year of Oilfield Services Hell” and is calling 2017 the year of “Oilfield Services Purgatory”.“While we expect a recovery in conventional spending, we struggle with the outlook for oil sands growth and believe a recovery in spending will be 12-24 months behind the broader North American market at the earliest,” Morrison’s report said.Salkeld when it comes to services, he agreed.“It’s just been absolute hell on the pricing and we’re coming out of it,” he said. “You’re seeing some of the more required services like cementing, fracking, pressure-pumping, those are in demand, drilling side, the rates are starting to increase, but they’re not giving it back easily.”Another big concern of both Salkeld and Morrison is attracting labour for the long-term in the seasonal reality of the oil and gas industry, especially during a downturn.“That rides whether we like it or not, we have to shut down,” he said. “That we can deal with, it’s these long downturns and this one, as you guys know, this is like three times worse than 2009. It’s equivalent to the early 80s one and that just shakes a lot of people’s confidence.”Despite mergers and acquisitions and the job losses of 2016, Salkeld said he is expecting more gains, as companies are holding job fairs, mostly searching for Canadian workers.“Bringing talent back that has experience in the sector, but it’s also we’ve got member companies starting up their own training programs and bringing new people into the industry,” he said.“It’s positive, we need people again,” he added. “We talked about this in ’09-’10 ramping back up again to meet the needs through 2010-2014; we’re faced with that again right now and the signs are positive.”last_img

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