There’s no avoiding it, it’s just a matter of surival.
The drilling forecast for 2015, produced by the Petroleum Services Association of Canada, shows a major decrease in wells created, a result of the current glut in oil production that’s emerged, due largely to a simple lack of demand, and according to PSAC president and CEO, Mark Salkeld, there’s no indication that prices are going to rebound any time soon.
“The stage is set right now for low oil prices,” he said, adding that on a minor high note, the industry closed out the year of 2014 better than originally expected back in October.
In Saskatchewan, and more prominently in the areas surrounding the Energy City, work in the oilfields is continuing at a steady rate, but a tough first and second quarter is expected.
“We’re bracing for pain,” Salkheld said. “These companies are getting as much work done as they can now before the slowdown and at the same time, they’re coming up with strategies to retain employees because this will turn around, and you need key people in place to make that happen.”
Jim Kopec, general manager of Panther Drilling Corp., said work has been lined up for the near future and that three out of their four rigs are currently operational. The loss of some workers has been a set back, but it’s one that Kopec has seen numerous times while working in the drilling industry, an industry, he added, that’s seen far more ups and downs in the past.
“We had one rig working for one company for four years, going into its fifth, but 20 years ago that was unheard of,” he said. “We have such a good workforce, and you hate to lose them, but I’ve been involved with oilfield drilling for 40-some years and that’s just the industry.”
Kopec said since his involvement with the drilling industry, the past 12 years have been the most consistent in terms of oil prices and their direct effect on Panther’s business, which in 2009, when oil prices crashed and fell below $40 per barrel, was still functioning admirably with the boom in the Bakken.
The vast landscape of oilfields in the southeast Saskatchewan has seen the excitement surrounding it diminished dramatically. Combined with the growing number of drilling companies in the area, adversity in the business is expected.
“You just have to remain optimistic,” Kopec said.
PSAC’s drilling forecast, when compared with drilling forecasts produced by the Canadian Association of Petroleum Producers and the Canadian Association of Oilwell Drilling Contractors, both of which forecast steeper declines in activity than PSAC, is a message of hope for the not-so-distant future.
“We might gain normality in prices sooner than later, but it’s going to be tough,” Salkeld said.
The annual drilling forecasts are based on natural gas prices, crude oil prices and the Canada-US exchange rate. In addition, PSAC uses relationships with members of the oilfield sectors across Western Canada to gain an understanding of where each of them stands in terms of activity.
“We talk to these guys from Weyburn and the Estevan area, and we get a sense of the up front, front line perspectives,” Salkeld said.
Following a number of focus group discussions and the massaging of “massive” amounts of data, a prediction is made.
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