Canadian drilling expected to fall 41pc

OREANDA-NEWS. A Canadian oil and gas association foresees a 41pc drop in drilling activity this year as producers cut capital budgets in response to depressed commodity prices.

The Canadian Association of Oilwell Drilling Contractors (CAODC) said the lower oil and natural gas prices will result in an industry-wide slowdown and employment losses.

In an update to its November 2014 forecast, CAODC said it expects to see the number of active drilling rigs to fall to an average of 203 per day in 2015 from 370 2014. Fleet utilization is also expected to drop from 46pc in 2014 to 26pc in 2015.

"The new reality of US\$55 oil means that the entire industry will hurt for a period, and drillers and service rig contractors are not immune to that," said CAODC president Mark Scholz.

The association also projected total job losses due to the decreased drilling activity could reach as high as 23,000 across Canada.

Oil and gas producers in Canada are expected to chop at least C\$23bn (\$18.5bn) from their capital budgets this year to C\$46bn (\$37bn).

The Canadian Association of Petroleum Producers' recently revised forecast said the reduced spending will be led by conventional oil producers, at C\$14bn from C\$35bn, as oil sands operators work through longer-term set budgets.

The producer association expects oil production will total 3.5mn b/d, about 150,000 b/d higher than in 2014 as more oil sands projects come on stream.

Both associations expect an average \$55/bl WTI in 2015.