Brian Zinchuk is editor and owner of Pipeline Online
Drilling is at a standstill in southern Saskatchewan. But North Dakota also saw rain, and has the same low oil prices. RiggerTalk.com
But that doesn’t seem to stop North Dakota
Spring breakup is long over, but drilling activity in Saskatchewan is all but dead for most of the province.
On May 22, RiggerTalk.com, which publishes data from the Canadian Association of Energy Contractors, showed just six active drilling rigs working in the province, and that includes three that were moving.
Five of those were in northwest Saskatchewan, with Strathcona Resources moving in Bonanza Drilling Rig 3 east of Kerrobert. The company had two rigs working south of Meota, Precision Drilling Rig 297 and Rig 188. That’s an area the company’s presentation highlights for substantial expansion in the coming years.
Saskatchewan’s largest oil producer, Cenovus, had just one rig working. That was PD Rig 197 near Vawn.
Axiom Oil and Gas Inc. was moving in PD Rig 148 just south of Neilburg.
And that’s it for western Saskatchewan. There were no other rigs working in west central or southwest Saskatchewan.
In southeast Saskatchewan, where there’s usually several rigs making hole by now, just one rig showed up. Hummingbird Oil was moving in Alliance Drilling Rig 3 southwest of Lampman.
However, it won’t be drilling for a while. Alliance Drilling general manager Brian Skjonsby explained on May 22, “It won’t be going until it dries up.”
Southeast Saskatchewan has seen a lot of rain in recent days, with much of the region receiving several inches. That, in turn, has turned roads and leases to mush. And with the fields just as soggy, Skjonsby said it’s not possible to landspread the drill cuttings. As a result, “There’s no way of doing any drilling right now.”
Lower oil price taking a big bite
But the situation is worse than just wet weather. In the past there’s been a threshold where oil companies start cutting back on expenditures and drilling programs. That threshold used to be around US$65 for WTI, and it appears that threshold is still very much in play. Pipeline Online has heard from numerous oilfield service companies that oil companies are delaying or cutting back their drilling programs, leaving service companies that work close to the drill bit with a notable lack of work. That includes everyone from dirt movers who push leases to drilling to casing to rig moving. But it’s also impacting the broader service industry as well, as oil companies are once again asking vendors to reduce their rate. That can be particularly difficult for service rig and drilling rig companies who increased salaries last year.
Notable in its contrast is northwest North Dakota, which also got a pile of rain, and is dealing with the same lower oil prices. But there, rigs by the dozen are still drilling. That includes two rigs due south of Estevan, according to RiggerTalk.
Skjonsby said, “The big question is what’s Carney going to do?” referring to newly-elected Prime Minister Mark Carney, who wrote a book called Values in which he advocates aggressive action to reduce hydrocarbon production for the sake of combatting anthropogenic (manmade) climate change. “If he follows the book, we’re in a world of hurt,” Skjonsby said.
Editor’s Note: Ken From, former CEO of SaskEnergy, TSASK and the Petroleum Technology Research Centre is the guest for the Pipeline Online Podcast at 1 p.m. on Monday, May 26.