Brian Zinchuk is editor and owner of Pipeline Online
Precision Drilling Rig 184 southeast of Lloydminster on Sept. 10. Photo by Brian Zinchuk
LLOYDMINSTER – Saskatchewan’s multi-lateral well incentive program, announced in the 2024 spring budget, has had a notable impact on oil drilling in Saskatchewan. Mark Scholz, the president of the Canadian Association of Energy Contractors (CAOEC), spoke to Pipeline Online at the Lloydminster Heavy Oil Show on Sept. 12, after his stint on stage as part of an industry association panel discussion.
“I think it’s great.” Scholz said, “The rig count continues to rise in Saskatchewan for, I think, a number of reasons, one being government policy, government incentives.
“But we also, I think, have had some significant progress on the takeaway capacity, which has allowed producers to be able to fill and put more barrels into pipelines.
“All of this despite of some of the federal policies we’ve seen, despite our federal government, have been a net positive for energy service contractors.”
While rig counts around 38 active rigs is nothing like the heyday of over a decade ago, Scholz pointed out, “Fifteen years ago, we had almost 1000 drilling rigs.
“Today we have 380 drilling rigs in our registry. Two hundred and 20 are working today. So we’re probably actually going to see another 50, 60, 70 rigs get decommissioned over the next 24 months.”
Asked why that would be the case, as Saskatchewan, for instance, might see a pickup in drilling due to the multilateral program, Scholz replied, “Well, some of the rigs in that 380, they’re older technology. They wouldn’t necessarily be upgraded to some of the levels that we see today. And it probably makes more sense, as opposed to spending the dollars, as I said in my in my remarks here. We need to see a material change in what we can charge and the commanding price that we can charge for our equipment.”
- 0084 EMP Metals Pipeline Online0084 EMP Metals Pipeline Online
- 0053 Kingston Midstream Westspur Alameda Click0053 Kingston Midstream Westspur Alameda Click
- 0082 CsHM 2024 Pipeline0082 CsHM 2024 Pipeline
- 0077 Caprice Resources Stand Up For Free Speech0077 Caprice Resources Stand Up For Free Speech
- 0076 Latus only0076 Latus only
- 0061 SIMSA 2024 For Sask Buy Sask0061 SIMSA 2024 For Sask Buy Sask
- 0055 Smart Power Be Smart with your Power office0055 Smart Power Be Smart with your Power office
- 0051 JML Hiring Pumpjack assembly0051 JML Hiring Pumpjack assembly
- 0049 Scotsburn Dental soft guitar0049 Scotsburn Dental soft guitar
- 0046 City of Estevan This is Estevan0046 City of Estevan This is Estevan
- 0041 DEEP Since 2018 now we are going to build0041 DEEP Since 2018 now we are going to build
- 0032 IWS Summer hiring rock trailer music
- 0022 Grimes winter hiring
- 0021 OSY Rentals S8 Promo
- 0018 IWS Hiring Royal Summer
- 0013 Panther Drilling PO ad 03 top drive rigs
- 0011
- 0006 JK Junior
- 0002 gilliss casing services0002 gilliss casing services
- 9002 Pipeline Online 30 sec EBEX9002 Pipeline Online 30 sec EBEX
- 9001
While some service rigs have been built in Nisku, Scholz said in recent years, no new drilling rigs have been built, for Canada, at least. “Greater than 10 years. A decade ago,” he said of the most recent rigs for Canada. But some rigs have been built for export, to Alaska and Saudi Arabia.
In Saskatchewan, the last brand new rigs were Stampede Rig 3 and Betts Rig 4, and that would have been right around that time.
(Update note: Bear Drilling of Nisku put recently retrofitted rigs into the field over the last few years. But according to the CAOEC, they were not new rigs.)
But when you go a decade without building new rigs, it means Canada’s industrial capacity in that regard has become hollowed out. Asked about the industrial base, and if we’re going to have to relearn how to build rigs, Scholz said, “I’m actually very, very worried about our capability as a country to build drilling rigs, in particular, whether it’s in Saskatchewan or Alberta, because there’s no business case for it. As I said, we haven’t seen a rig built in over 10 years. So speaking with rig manufacturers, actually, as of last, last week, that equipment is going to be built in the United States and shipped up to Canada.”
He said there are capabilities for Level IV inspections and upgrades. These are still routine. “But I would say, the days of a mass manufacturing spree of drilling rigs that’s going to enter the Canadian market? I don’t see that happening for a very, very long time.”
Is there anything left in the bush worth pulling out and putting back into operation?
Scholz said, “See, this is the problem, right? It’s when you have equipment that’s been that’s been idle for so long. I mean, this is where you ask, why are we cutting these, these rigs up? Because, quite frankly, it’s incredibly expensive to actually take that equipment and actually bring it up to (spec). Unless you have a unless you have a client that essentially is going to sign a multi year long term contract with you, you’re not interested in doing those types of upgrades.”
- 0084 EMP Metals Pipeline Online0084 EMP Metals Pipeline Online
- 0053 Kingston Midstream Westspur Alameda Click0053 Kingston Midstream Westspur Alameda Click
- 0082 CsHM 2024 Pipeline0082 CsHM 2024 Pipeline
- 0077 Caprice Resources Stand Up For Free Speech0077 Caprice Resources Stand Up For Free Speech
- 0076 Latus only0076 Latus only
- 0061 SIMSA 2024 For Sask Buy Sask0061 SIMSA 2024 For Sask Buy Sask
- 0055 Smart Power Be Smart with your Power office0055 Smart Power Be Smart with your Power office
- 0051 JML Hiring Pumpjack assembly0051 JML Hiring Pumpjack assembly
- 0049 Scotsburn Dental soft guitar0049 Scotsburn Dental soft guitar
- 0046 City of Estevan This is Estevan0046 City of Estevan This is Estevan
- 0041 DEEP Since 2018 now we are going to build0041 DEEP Since 2018 now we are going to build
- 0032 IWS Summer hiring rock trailer music
- 0022 Grimes winter hiring
- 0021 OSY Rentals S8 Promo
- 0018 IWS Hiring Royal Summer
- 0013 Panther Drilling PO ad 03 top drive rigs
- 0011
- 0006 JK Junior
- 0002 gilliss casing services0002 gilliss casing services
- 9002 Pipeline Online 30 sec EBEX9002 Pipeline Online 30 sec EBEX
- 9001