Last month saw a lot of doom and gloom in the oilpatch, this month it was amplified.
We saw oil drop to the $45 range in January. It seemed that level, below $50, is when things started “getting real,” so to speak. The largest oilfield service
providers started hacking and slashing. First it was Schlumberger, dropping 9,000 people worldwide.
Then Baker Hughes announced it will lay off 7,000 in the coming months, which equates to a higher percentage of its workforce than Schlumberger. Halliburton, which is in the process of buying Baker, is looking at 1,000 job cuts worldwide.
Within southeast Saskatchewan, most of the people we spoke to were still relatively busy, but things were slowing down. Rigs were getting racked as companies dramatically curtailed their drilling programs. Legacy Oil + Gas, for instance, was down to two rigs in southeast Saskatchewan and one in Alberta by Jan.
20.
Crescent Point was the only substantial driller who kept nearly all their rigs going. As of Jan. 20, they still had 25 rigs, the most in all of Canada. They
outpaced second-place Progress Energy Canada Ltd. by 5 rigs on that day. Of those 25 rigs, all but two were working in Saskatchewan. One was just across the Manitoba border near Elkhorn, and the other was close to the B.C. border in northwest Alberta. How long Crescent Point will keep up the pace is anyone’s
guess.
Wish we had more good news...southeast Saskatchewan would have nearly ground to a halt, drilling-wise. Of those 25 rigs working for Crescent Point, six
belonged to CanElson Drilling. On Jan. 19, CanElson announced on Jan. 19 it had slashed its 2015 capital spending program by 80 per cent from $63.9 million
to just $12.9 million over the realization that low oil prices will reduce drilling activity. The decision includes a deferral of the completion of three new rigs which had
been contracted out.
Many companies told us they did not expect things to pick up until much later in the year. That’s going to make for a pretty lean year. They might have to cut
wages, and they are going to try their best not to cut jobs. One company noted that during the last downturn, they had to use job-sharing, bolstered by a government
program, to keep their staff.
CNRL cut its capital budget by $2.41 billion. That may just seem like a nebulous number until you put it into context: it’s equal to roughly 20 per cent of the
Saskatchewan provincial budget for a year. Suncor Energy said it would lop off 1,000 employees and contractors off their payroll, freeze hiring and slash a billion from its capital spending plan.
We wish there were better news to report, but until oil prices turn around, our industry still got a long row to hoe. With all the layoffs taking place, there may be plenty of time for gardening with that hoe.
