CAODC projects slight drilling increase in 2018

The Canadian Association of Oilwell Drilling Contractors expects a slight increase in well drilling in Canada in 2018, Kallanish Energy reports.

The association is projecting 6,138 wells will be drilled next year, an increase of 107 from 2017’s 6,031 wells, the Calgary-based group said Monday.

It is also projecting 70,587 operating days in 2018, an increase of 1,234 from 2017’s 69,353.

The association said the drilling rig floor is expected to decrease by 19 in 2018: from 634 in 2017, to 615 in 2018.

The CAODC forecast focuses on operating days as a key economic indicator of the health of the energy sector.

While there are signs that the drilling and service rig market has bottomed out, “meaningful upward movement of day rates remains a struggle,” the association said, in a statement.

“Right now, our members are offering a premium product for discounted rates just to survive,” said CAODC president Mark Scholz. “The combination of low commodity pricing and the cumulative costs of government policy have been detrimental to say the least.”

After a sustained period of no cash flow and an exodus of investment from Canadian drilling areas, contractors are challenged with funding the capital to adequately maintain equipment and reinvest back into their businesses, Scholz said. “As such, industry conditions remain fragile.”

The CAODC is hoping for what it called “a muted stability” in 2018. “What we need most is the optimism a strong investment climate will create,” Scholz said.

Canada also needs to do more to boost market access for drillers, he said.

Two projects, the Pacific Northwest LMG plant and the Energy East Pipeline, have been cancelled in the last six months and the Trans Mountain Pipeline is running into provincial delays, the association said.