Canadian Drillers Optimistic for 2021 Uptick

The lobby group representing Canada’s drilling industry is optimistic that 2021 will see a modest recovery from the worst year in decades, suggesting November 18 that more wells will be drilled than in 2020.

In its annual State of the Industry Report, the Canadian Association of Oilwell Drilling Contractors (CAODC) is forecasting that 3,771 wells will be drilled in 2021, up 14% from its current forecast for 2020 of 3,296 wells. The industry drilled 5,545 wells in 2019, 7,428 in 2018 and more than 13,000 in 2014.

With increased drilling will come employment recovery, the CAODC report says. In 2019, the drilling sector accounted for 24,421 direct and indirect jobs; this year, that total has fallen to 16,201 jobs, but in 2021, the association is projecting an increase of 2,349, to 18,550 direct and indirect jobs. In 2014, the drilling sector supported nearly 72,000 jobs.

The group representing Canada’s oilfield services sector, however, sees no such recovery: in late October, the Petroleum Services Association of Canada released its 2021 activity forecast showing yet another decline in drilling next year, to 2,600 wells from 2,850 this year.

Mark Scholz, CEO of the CAODC, said market volatility and uncertainty will continue into 2021, and several factors “hang in the balance.” The prospects for an effective Covid-19 vaccine “are encouraging” but the impact of the pandemic on energy demand next year, and access to capital for the association’s members and their customers – Canadian oil and gas producers – remain challenges the sector still faces.

“Although the industry’s short-term challenges endure, we continue to be bullish in the medium and long-term as the world continues to demand Canadian energy resources,” Scholz said. “We will deal with what comes, whatever it may be, but next year could finally be the start of a recovery.”