The Canadian Association of Oilwell Drilling Contractors expects that pricing differentials and pipeline delays will continue to depress activity into 2019.
CAODC released its 2019 drilling forecast on Thursday, projecting that 6,962 wells will be drilled in 2019, up by just 51 from 2018.
The Canadian rig fleet is also expected to decrease by 58, to 522 rigs, as newer, high-spec rigs and associated senior rig technicians are deployed to the United States where costs are lower and day rates are higher.
“Tone at the top matters, and investors are uncertain as to whether Canada wants to be in the oil and gas business in any meaningful way,” CAODC president Mark Scholz said in a statement.
The politicization of oil and gas infrastructure in Canada, along with increased taxation and regulatory requirements, continues to result in significant delays and additional costs for Canadian producers, and sustained price differentials for Canadian crude blends, CAODC said.
“The lack of activity is not hard to understand,” Sholz said. “The Canadian oil and gas industry is simply too dysfunctional to anticipate any kind of quick recovery.”
CAODC sees no improvement in sight for activity levels through Q3/2019, although it said the completion of Enbridge’s Line 3 replacement could produce a modest boost in drilling activity in Q4.