Derrick Digest for Oct 28, 2016

Oilpatch re-hirings a 'bullish signal'

The Derrick Digest is a weekly collection of curated content, based on events from across the oil and gas industry, that caught our eye at Pennine Petroleum Corporation. We hope you find it just as interesting as we do.

 

OCT. 28, 2016

After nearly two years in the abyss, is the Canadian oilpatch on the way up?

Precision Drilling Corp. clearly thinks so.

Precision, one of Canada’s largest drilling outfits, recently announced that it had re-hired 1,000 workers, and reactivated 53 rigs across North America—a clear sign, if there ever was one, that the upstream oil industry is on the road to recovery.

“The key takeaway is that this is the first time in two years that our customers are even talking about increasing activity—and not how quickly can we lay the rigs down,” Kevin Neveu, Precision’s CEO, told reporters and analysts during an Oct. 21 conference call. “I think it’s a very bullish signal.”

As oil hovers near US$50 a barrel, the Canadian Association of Oilwell Drilling Contractors (CAODC) is cautioning that a recovery in the industry will be slow.

Still, “I definitely believe the level of optimism is higher than it has been,” Shane Walper, CEO of Predator Drilling Inc., tells the Calgary Herald. “We’ve got more opportunities in front of us this winter.”

 

DRILLERS’ E-PETITION EARNS CANADIANS’ SUPPORT

Speaking of drilling activity, the CAODC was very busy recently, collecting enough signatures to create the largest e-petition ever delivered to the House of Commons.

The CAODC’s Oil Respect e-petition, officially presented by Member of Parliament Shannon Stubbs, features 34,537 signatures from Canadians, and calls on the federal government to “vocally support the oil and gas industry, new pipelines across Canada, and hundreds of thousands of employed and unemployed oil workers.”

Industry estimates put the direct and indirect job-loss total at more than 100,000 since the price of oil crashed in late 2014.

 

CONNECTING TO TIDEWATER ‘CRITICALLY IMPORTANT’

Canada is a “trading nation,” notes Patricia Mohr. So it’s not particularly helpful, clearly, when you’re forced to sell your product at a discount.

Mohr, a Vancouver-based economist and commodity market specialist, recently wrote an opinion-editorial in the Globe and Mail—noting that Canadian oil generated a $70-billion trade surplus in 2014, but slipped from surplus to deficit in 2015 (and is currently at a negative $23.3 billion) after the oil price downturn.

“Much has been said and written about the vital need to build oil export pipelines to the coasts of British Columbia and Atlantic Canada. Yet many Canadians still appear unaware of how critically important this is to our economy,” she writes.

“It is risky to rely largely on one key export market, the United States . . . what’s more, insufficient pipeline capability to tidewater has reduced the price paid for Canadian crude.”

 

CANADA’S CARBON TAX: POINTLESS EFFORT, FLIMSY LOGIC

What will Canada’s proposed carbon tax accomplish?

Aaron Wudrick, the federal director of the Canadian Taxpayers Federation, doesn’t mince words.

In a recent commentary in the National Post, Wudrick uses carbon emission numbers to point out that Canada is simply too small a country to have an impact on global levels.

“The Trudeau government’s decision to tax Canadians into submission is likely to achieve many things: it will strain the budgets of millions of Canadian households; it will devastate thousands of Canadian businesses; and it will fill government coffers with billions of dollars in new tax revenues,” he writes.

“The one thing it definitely won’t do is impact global climate change.”