2020 has been an atrocious year for the Canadian oil industry. It has been the worst year in modern times, and 2021 isn’t going to be drastically different. In the annual forecast released by Canadian Association of Oilwell Drilling Contractors (CAODC), they expect 2021 to be slightly better. Minor improvements are all that can be expected, unfortunately.
Here’s more on this report:
Number of oil wells drilled
For 2021, the report projects 37771 oil wells drilled, a 14% increase since 2020. However, this information cannot be viewed in isolation. When compared to 2019’s 5545 oil wells drilled, the number has dropped significantly.
While the report isn’t broken down provincially, the president of the CAODC stated that historical data shows that Alberta accounts for 65%, Saskatchewan 25%, and 10% is split between British Columbia and Manitoba. However, this is subject to change since the natural gas prices in British Columbia can change the numbers. The price for natural gas increased from $1 to $3 per Mcf.
Continuous decreasing trend of drilling rigs
Unfortunately, things aren’t looking so great for drilling rigs. By the end of the year, the association is expecting the fleet to further shrink from 505 to 478. Even if they doubled their figure of rigs in use in the first quarter of the year, that still meant that about half of the fleet isn’t in use. They also foresee service rigs being cut from the fleet as well. Around 100 service rigs are expected to be cut. Rigs aren’t marketable anymore and many companies don’t have the means to have this equipment recertified. With many rigs being houred-out, it doesn’t justify having them recertified.
The president of the association also revealed that the Accelerated Site Closure Program has been launched. Saskatchewan will be receiving $400 million under The Wellsite Abandonment And Reclamation Program.
New pipelines laid
The Trans Mountain Pipeline and Coastal GasLink Pipeline are under construction in BC and Alberta, which is good news amidst the tough year 2021 is expected to be. Having said that the other pipeline under construction, Keystone XL, is under threat as President-Elect Joe Biden has stated he would cancel it. However, things said during election campaigns aren’t all followed. Since this pipeline creates many jobs, there’s still some hope.
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