Canadian drillers' group sees more than 25,000 jobs lost

Mon Jun 15, 2015 3:01pm EDT
 
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CALGARY, Alberta, June 15 (Reuters) - The Canadian Association of Oilwell Drilling Contractors slashed its 2015 drilling forecast for a second time on Monday, forecasting that more than 25,000 jobs will disappear because of weak oil prices.

The number of drillers' operating days is expected to decline by an additional 10,320, after the industry body said in January that 64,645 operating days would be lost. In 2014, the total number of operating days in 2014 was 131,021.

As a result the CAODC estimates 25,110 jobs linked to the drilling industry will be cut, up from a previous forecast for 23,000 positions to be lost because of the downturn.

The drilling industry in Western Canada has been particularly hard hit by the drop in oil prices, which tumbled from more than $100 a barrel last June to around $45 in March, as producers sought to drive down operating costs by renegotiating contracts with service providers.

Benchmark U.S. crude has since recovered to just under $60 a barrel, but oil companies continue to defer new projects and keep a lid on capital spending.

There are currently 123 active drilling rigs in the Western Canadian Sedimentary Basin, according to the latest figures from RBC Capital Markets, down 54 percent from the same time last year and 53 percent below the five-year average.

CAODC President Mark Scholz said other factors, including the potential for Alberta's new left-leaning government to change how crude producers pay royalties, meant the outlook for drillers was uncertain.

"Potential policy changes in Alberta with respect to royalties, other factors such as LNG activity in British Columbia and depressed commodity prices, means our members must continue to streamline operations and remain agile," said Scholz. (Reporting by Nia Williams; Editing by Alan Crosby)