Canadian Oil Drilling Is Set To See Worst Year On Record

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CALGARY — The Canadian Association of Oilwell Drilling Contractors expects 2016 to be the worst year for drilling activity in almost four decades of record keeping.

The association revised down its forecast for the year on Wednesday, dropping the number of expected well drillings for the year by a quarter to 3,562 compared with its forecast last November.

Drilling activity has been on a steep decline as the drop in oil prices has prompted companies to cut back on exploration and early development.

oilsands drilling
Workers build a drilling rig at the MEG Energy site near Fort McMurray. (Photo: Michael S. Williamson/The Washington Post via Getty Images)

This year's expected drill count is down 33 per cent from last year's 5,292 wells drilled, and down 68 per cent compared with 2014 when 11,226 wells were drilled.

The drop in well drilling has meant fewer jobs in the industry and fewer rigs needed, with the CAODC revising down the direct and indirect employment numbers by 6,075, or 28 per cent, to 15,390 for the year. The number of rigs needed in the fourth quarter has been revised by 31 per cent to 140 rigs.

CAODC president Mark Scholz said in a statement that the higher tax burden and regulatory delays are creating investment uncertainty in Canada.

alberta oil drilling
Workers remove caps from drill pipes on a Precision Drilling Trust rig at a site for an Encana Corp. natural gas well near Alix, Alta. on Dec. 19, 2009. (Photo: Norm Betts/Bloomberg via Getty Images)

"The oil and gas services industry is facing the most difficult economic time in a generation,'' said Scholz.

"Although government does not have control over the price of oil, it has influence in ensuring Canada is an investment destination of choice once the industry recovers.''

He said 2016 is expected to be the worst year for the industry since it started keeping drilling records in 1977.

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