CALGARY – The head of group that represents Canada’s oil well drillers says next year will be one of the worst in decades as activity levels continue to drop.
“The drilling and service rig industry is facing one of the most difficult economic times in a generation,” Mark Scholz, president of the Canadian Association of Oilwell Drilling Contractors, said Wednesday in presenting the association’s 2016 forecast.
“The active rig count in Western Canada today is at the same level as we experienced in 1983, one of the worst periods in our industry’s history.”
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The association is forecasting 56,260 operating days next year, a drop of 57 per cent compared with 2014 and 17 per cent compared with this year.
Fewer operating days mean fewer jobs, with direct and indirect jobs forecast to be down to 21,465 next year, compared with 25,785 this year and 49,950 in 2014, the association says.
“It is difficult to quantify the challenges ahead, but there will be significant hardship on businesses, families and workers,” Scholz said.
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The association expects 4,728 wells drilled next year, compared with 5,531 this year and 11,226 last year. Utilization rates are projected to be at 22 per cent next year, down from 25 per cent this year and 46 per cent in 2014.
The drilling industry has been hit hard as oil and gas producers have pulled back on exploration and development plans in the wake of lower oil prices.
Scholz said new government policies aren’t helping the industry in these difficult times.
“An increase in taxes and an uncertain competitive landscape with respect to royalties, and new environmental taxes have left a big question mark on the attractiveness of operating in Alberta,” Scholz said.
“The cumulative impacts of fiscal policy changes implemented, or contemplated, by the Alberta government could drive away investment and jobs for a very long time.”
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