'Bleak' outlook for oilfield services industry as drilling activity expected to hit lows not seen in decades
Petroleum Services Association of Canada expects declines to continue, but with slight increase in B.C.
Drilling activity across the country will hit lows not seen in decades, according to the latest forecast from the Petroleum Services Association of Canada.
"This bleak outlook for the oilfield services sector (OFS), that includes a national supply chain with manufacturers in Ontario and Quebec, is devastating for a sector that is already struggling to survive in this sixth year of a downturn," said PSAC's interim president and CEO Elizabeth Aquin in a news release.
She said activity plunged 42 per cent from 2019 to 2020 and that downward trend will continue.
The organization expects 2,600 wells to be drilled across Canada in 2021. PSAC's final revised forecast for the current year puts the number of wells drilled at 2,850.
Provincially, the organization forecasts 1,230 wells will be drilled in Alberta, 900 in Saskatchewan, 80 in Manitoba and 370 in B.C.
That represents declines of 118 wells in Alberta, 166 in Saskatchewan, flat numbers in Manitoba and an increase in B.C. of 35.
In Eastern Canada, it's anticipated 20 wells will be drilled, up from 18 in 2020.
"There is little incentive for capital investment by the exploration and production companies to support increased activity and production," said Aquin in the release.
"Recovery from COVID-19 remains elusive, holding global demand for oil at bay, and balance sheets remain challenged and focused on reducing debt."
She took issue with the federal government for bringing in new regulations and focusing on climate change while the industry is struggling, which she said hampers investment, while acknowledging the Canada Emergency Wage Subsidy and funding for the cleanup of orphaned and abandoned wells have both helped.
Aquin, however, said those aids are either temporary or not helping everyone in the sector.
"While there are also nascent opportunities for some in the OFS sector in geothermal and hydrogen — energy sources that use many of the same services, much more is needed now to ensure a robust sector emerges for the continued responsible development, innovation, and new technology that will advance climate goals," she said.