Brian Zinchuk is editor and owner of Pipeline Online
Alliance Drilling Rig 2 was drilling northeast of Glen Ewen on gorgeous Sept. 29. Despite weather that has been very agreeable most of the fall, many oil companies are cutting back on their drilling programs. Photo by Brian Zinchuk
CALGARY – Even though the past year has seen relatively decent oil prices, as high as US$94 per barrel a few weeks ago, Saskatchewan has not seen a related increase in drilling activity.
Indeed, the pronounced lack of a pickup in activity in Saskatchewan was directly cited as a reason why the Day Group of Companies decided to move their Cara Dawn (2019) heavy haul trucking business to North Dakota, to operate under a new name.
On Nov. 14, there were only 27 drilling rigs making hole in Saskatchewan according to RiggerTalk.com, and two of those were drilling for helium and one was working on potash.
So with oil prices still pretty decent, at US$78 per barrel on Nov. 14, just what is going on?
Pipeline Online asked Mark Scholz, president of the Canadian Association of Energy Contractors (CAOEC) about this on Nov. 10. Scholz was in Saskatchewan a few days earlier, taking part in a CAOEC get together with MLAs at the Saskatchewan Legislature.
Scholz said, “I think there’s a lot of different issues at play here.
“A lot of that’s outside of our control, right? The pace of activity is based on the appetite of our customer, which is the producer. So there are a number of reasons why.
He continued, “At the end of the day, we’ve got 200 rigs working. It’s not just in Saskatchewan, that we’re seeing this anomaly. There are 200 rigs working today across western Canada, at US$85 a barrel. Gas is a little bit different story. But if this were back in, let’s say, 2014-2015, there would be 400 to 450 rigs working.
- 0072 Outlaw Buckers and Oil Kings 20240072 Outlaw Buckers and Oil Kings 2024
- 0069 Sask Oil Show 2024 banquet tickets0069 Sask Oil Show 2024 banquet tickets
- 0071 Pride Upkeep 2024 Packages0071 Pride Upkeep 2024 Packages
- 0070 Sask Oil Show 2024 pre-register0070 Sask Oil Show 2024 pre-register
- 0068 Sask Oil Show 2024 booth0068 Sask Oil Show 2024 booth
- 0067 PFM SaskWorks Payroll Investment Plan0067 PFM SaskWorks Payroll Investment Plan
- 0066 WBPC Promo video 30 seconds0066 WBPC Promo video 30 seconds
- 0065 Anova Resources field operator Oxbow0065 Anova Resources field operator Oxbow
- 0064 Estevan OTS0064 Estevan OTS
- 0063 Turnbull Excavating hiring crusher0063 Turnbull Excavating hiring crusher
- 0062 TED_EPAC_Technology_300062 TED_EPAC_Technology_30
- 0061 SIMSA 2024 For Sask Buy Sask0061 SIMSA 2024 For Sask Buy Sask
- 0060 Arizona Lithium Lease building0060 Arizona Lithium Lease building
- 0059 Southeast College Heavy Equipment Operator0059 Southeast College Heavy Equipment Operator
- 0058 Royal Helium Steveville opens anonymous rocket0058 Royal Helium Steveville opens anonymous rocket
- 0055 Smart Power Be Smart with your Power office0055 Smart Power Be Smart with your Power office
- 0053 Kingston Midstream Westspur Alameda Click Before You Dig large text0053 Kingston Midstream Westspur Alameda Click Before You Dig large text
- 0052 Predator Inspections0052 Predator Inspections
- 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
- 0015 Latus Viro0015 Latus Viro
- 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
“So it’s an issue that’s taking place across the basin, and it’s not just unique in Saskatchewan. And part of that is the insane amount of capital discipline, and I would say constraints from producers, that are being incentivized by the market to send money back to shareholders as opposed to putting it back into the ground.
“And any time that companies, our customers, announce an increase in their capital spend, the market hammers them. They get penalized in the market.”
“And I don’t know how long that this type of environment is going to last. My assumption is, at some point, there is going to be a pivot. When that’s going to happen? I don’t know. But I would say in many cases, the market is looking for very short-term returns, and they’re not thinking very long term.
“And this is, I think, systemic across, really, the globe, when it comes to the oil and gas industry. Some of it has to do with public policy, you know, when we still don’t know where the federal government is going to go on things like emission caps and additional regulations that could potentially harm the industry.”
Scholz pointed out recent mergers and acquisition activity taking place with the oil companies. He said there’s only so much that a company can focus on, and if they’re working on mergers and acquisitions, that can distract from their drilling programs.
Also, an oil producer can grow its production through mergers and acquisitions instead of the drill bit. And when that happens, there’s fewer rigs working.
“I think it’s we’re still going to see probably some more deals,” he said. “That’s just this weird environment that we’re in. Yeah, it’s hard on the energy services sector. Growing through acquisitions does not help the energy services sector.”
- 0072 Outlaw Buckers and Oil Kings 20240072 Outlaw Buckers and Oil Kings 2024
- 0069 Sask Oil Show 2024 banquet tickets0069 Sask Oil Show 2024 banquet tickets
- 0071 Pride Upkeep 2024 Packages0071 Pride Upkeep 2024 Packages
- 0070 Sask Oil Show 2024 pre-register0070 Sask Oil Show 2024 pre-register
- 0068 Sask Oil Show 2024 booth0068 Sask Oil Show 2024 booth
- 0067 PFM SaskWorks Payroll Investment Plan0067 PFM SaskWorks Payroll Investment Plan
- 0066 WBPC Promo video 30 seconds0066 WBPC Promo video 30 seconds
- 0065 Anova Resources field operator Oxbow0065 Anova Resources field operator Oxbow
- 0064 Estevan OTS0064 Estevan OTS
- 0063 Turnbull Excavating hiring crusher0063 Turnbull Excavating hiring crusher
- 0062 TED_EPAC_Technology_300062 TED_EPAC_Technology_30
- 0061 SIMSA 2024 For Sask Buy Sask0061 SIMSA 2024 For Sask Buy Sask
- 0060 Arizona Lithium Lease building0060 Arizona Lithium Lease building
- 0059 Southeast College Heavy Equipment Operator0059 Southeast College Heavy Equipment Operator
- 0058 Royal Helium Steveville opens anonymous rocket0058 Royal Helium Steveville opens anonymous rocket
- 0055 Smart Power Be Smart with your Power office0055 Smart Power Be Smart with your Power office
- 0053 Kingston Midstream Westspur Alameda Click Before You Dig large text0053 Kingston Midstream Westspur Alameda Click Before You Dig large text
- 0052 Predator Inspections0052 Predator Inspections
- 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
- 0015 Latus Viro0015 Latus Viro
- 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