Oilwell drilling contractors expect one of worst years in history

The Canadian Association of Oilwell Drilling Contractors (CAODC) released a bleak forecast for the upcoming year that projects the downturn will only get worse, with 58 per cent fewer wells drilled than 2014.

Canadian Association of Oilwell Drilling Contractors (CAODC) releases grim forecast for 2016

A historically grim year expected in 2016 for oilwell drillers. 1:30

The Canadian Association of Oilwell Drilling Contractors has released a bleak forecast for the upcoming year that projects the downturn will only get worse for the sector.

CAODC projects 4,728 wells to be drilled, a decrease of 58 per cent from the 11,226 wells drilled in 2014.

"The 2016 forecast is grim or as we call it in our office, butt ugly," said Brian Krausert with Beaver Drilling, who delivered the CAODC forecast to the organization's members at an event in downtown Calgary. "It's not a pretty sight, but I know the industry is resilient enough and hopefully we'll be here next year." 

People are losing their livelihoods, people are going to get desperate- Greg Ward, Remote Waste

As rigs sit idle, workers are struggling to find work. The drilling industry expects to lose 28,485 jobs since 2014, a decrease of 57 per cent. In total, the Canadian oil industry has lost around 36,000 jobs since the oil price collapse.

"The oil and gas services industry is facing one of the most difficult economic times in a generation," said CAODC president Mark Scholz.

The rig count in western Canada is expected to plunge to the same level seen in 1983, one of the worst periods in the industry's history. 
The CAODC forecasts the rig count in western Canada will plunge in 2016. (CBC)

The organization is lobbying the provincial and federal governments to keep taxes and other costs low for the industry.

"There is incredible uncertainty for investors to come and put money into Alberta. We've seen corporate tax hikes, it's unclear what type of royalty increases we'll see, environmental taxes we'll have a better understanding about in the next couple months here," said Scholz.

The industry has struggled ever since oil prices collapsed in the summer of 2014 as North American prices dropped from more than $100 US a barrel to about $41 US a barrel today.

"It's pretty depressing," said Greg Ward with Remote Waste, a company that treats waste water for well sites and work camps. "People are losing their homes, people are losing their livelihoods, people are going to get desperate."


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