Oil is an important product for Canada economically. With the decline in oil prices and the decline in how many wells are being drilled many people are left worried and have many questions that are unanswered.
The Canadian Association of Oilwell Drilling Contractors is predicting that there will be another decline with drilling activity by 10 percent and this also includes a cutback in jobs.
Another declined is predicted because of a pipeline construction, lower commodity prices and the uncertainty with regards to British Columbia’s LNG industry.
Just last year around October it was calculated that there was a decline of 47 percent in well drilling and 50 percent of jobs were also lost; this is a dramatic and large decline.
For such an important resource that has a large demand and an industry that has the potential to create jobs for Canadian people there must be a reason for the dramatic cutbacks as of late.
- The first main reason is the commodity prices have been extremely unstable; therefore, it causes a large majority of investors not to spend their money because they are worried how things may turn out.
- The second reason for the cutbacks is because it has been difficult to raise money since the capital market has been tight and oil contractors like the Canadian Association of Oilwell Drilling Contactors rely on the capital marker to run their business.
- In addition, there have also been changes made by the government which creates changes in Alberta, industries and drilling technology
Association President Mark Scholz commented on this concern, “They are talking about energy policy reviews that are causing uncertainty there’s no question about it, where we’re actually going to land when it comes to land in terms of royalties. They’ve already announced a two percent corporate income tax hike. However, we’ve actually had a chance to sit down on a few occasions and they’ve been incredibly receptive to working with the industry.”
People like Mark Scholz remain optimistic as they know that job industries that are connected to oil are really important to the Canadian economy.
Despite the positive thoughts it is hard not to ignore the statistics; the Canadian Association of Oilwell Drilling Contractors has seen a decline since last year from 5,531 to the present number of wells that are drilled to 5,320. The number may also be lower because it does not calculate those wells drilled and how many are fully completed.
Hopefully, President Mark Scholz positive thoughts go through and we will see the number increase.