Canada's Oil Rebound Elusive as Rig Count Drops to Record Lowby and
Only 37, or 6%, of the country's 671 rigs are currently in use
Companies keep `cutting and really there's no more to cut'
Rig activity in Canada’s oil fields has reached a record low, weekly industry data show, a sign that rebounding prices have yet to put an end to the industry’s woes.
The number of active rigs drilling in Canada fell to 37 this week, the lowest count ever according to historical data provided by the Canadian Association of Oilwell Drilling Contractors, which dates back to 1984. Only 6 percent of the country’s 671 oil rigs are currently in use.
The figures underscore the barriers to a turnaround in Canada’s oil patch, the one-time economic engine whose slump has lowered growth projections in the country.
“It’s bad,” said John Bayko, vice president of communications for the Calgary-based association. “Companies have had low cash flow or no cash flow for a long period of time. They’re in second, third, fourth, fifth waves of consolidation and layoffs. They’re cutting and really there’s no more to cut.”
Canadian Prime Minister Justin Trudeau’s budget last month was based on a forecast that West Texas Intermediate crude would average $40 per barrel in 2016. WTI traded around $43 on Monday and has averaged $35 so far this year.
Even a sustained rebound, or a leveling-off, of crude prices would not mean Canada’s conventional oil wells -- as opposed to its oil sands -- would turn around again, Bayko said.
“With our members, the momentum is going so hard in the other directions that a quick turnaround in WTI prices isn’t going to reflect good things for drilling and service contractors right away,” he said.
The number of active rigs hit a record high of 741 in 2006. It touched a 2016 high of 214 rigs in January. Of the 37 active rigs, 27 are in Alberta, eight are in British Columbia and two are in Saskatchewan.