Petroleum Services Association of Canada (PSAC) presented bad news at its quarterly update.
The organization has seen some tough times in the oilpatch, but nothing like this.
“This is shaping up to be the worst one,” said Mark Salkeld, President & CEO of PSAC. “ I’ve been in the oilpatch for 35 years, I went through the NEP, I got laid off because of the NEP… tens of thousands of people are unemployed with no end in sight.”
The numbers speak for themselves. Just over 3,300 wells will be drilled in Canada this year, a 36% drop from what PSAC predicted six months ago. In Alberta, 800 fewer wells will be drilled this year than had been forecast.
“Just watching the winter activity, one quarter of the fleet working, and then just watching our member companies on the frack spread side, completions backed off,” said Salkeld. “They are capping the wells and waiting for a better time to do the rest of the completions.”
Meanwhile, the entire oil and gas business continues to contract. Suncor, which is Canada’s largest oilsands producer, says it won’t be starting any new projects either. The company is set to trim $500 million in costs this year after cutting a billion dollars in 2015. Suncor is also looking at selling of $1.5 billion in assets, which could include its retail stake in Petro-Canada… all of which adds up to a litany of bad new across the oilpatch.
“It could get worse, absolutely, we are sitting under a cloud right now, the whole geo-political piece that you heard from Greg, as well as the supply and demand, we are definitely not out of the woods yet,” said Salkeld.
The price of oil (WTI) closed on Thursday at just over $46 per barrel.
