Energy producers grappling with months of low crude prices are expected to halve drilling in Canada this year.
The number of oil and natural gas wells drilled will plunge 52 percent to 5,320, according to a forecast today by the Calgary-based Petroleum Services Association of Canada, which represents drillers and fracking companies. The organization reduced its outlook for 2015 activity by 47 percent from an October assumption.
Producers including Suncor Energy Inc. and Cenovus Energy Inc. have cut jobs, shelved projects and lowered drilling budgets after a glut of crude sent prices plunging last year. U.S. oil, which fell to its lowest in six years last month, is still down about 27 percent since the Canadian industry group released its initial forecast for 2015 activity.
“We’re dropping down to about the same levels as 2008-2009, but this one’s fast,” Mark Salkeld, president of the services group, said in an interview in reference to the last oil market downturn. “This one caught everybody by surprise.”
Producers and service providers are still negotiating cost cuts and working together to maintain some activity, Salkeld said. To keep employees on hand for a rebound, drillers and frackers are cutting bonuses and introducing “creative” vacations and furloughs, he said. “We’re going to ramp up again and we’re gonna need good people to hit the ground running.”
U.S. crude prices settled 1.8 percent higher today at $59.63 a barrel. They’re 44 percent down from a June high.