CALGARY - Canada`s oil and gas drilling industry will sink this year to its lowest level of activity since 1992, spelling the end of the road for some debt burdened companies, warned an industry association on issuing a bleak outlook for the year.
The Canadian Association of Oilwell Drilling Contractors said Tuesday only a quarter of drilling rigs in the country, or 219, are expected to be active in 2009, compared with an average 40 per cent last year.
"It`s pretty grim," Don Herring, association president, said of the 2009 forecast. "We will see some companies disappear, and in all likelihood it will be some of the smaller ones. In particular, it will impact companies that aren`t well-positioned financially."
The association expects industry will drill 8,787 oil and gas wells this year, compared with 16,844 wells last year.
Low natural gas prices -- which drive the bulk of drilling activity in Western Canada --and a surplus of supply have pulled down capital budgets on both sides of the border, prompting companies to shut in completed wells and hold off drilling new ones.
The drilling industry already has lost more than 15,000 jobs from a workforce of 70,000 since the end of 2008.
Tuesday`s forecast was the association`s third revision this year, down from a suggested 11,176 wells predicted in April and 14,325 wells forecast in October. This latest forecast assumed an average $75 US per barrel of oil and $5 per thousand cubic feet of natural gas.
Read the full article here.
The Canadian Association of Oilwell Drilling Contractors said Tuesday only a quarter of drilling rigs in the country, or 219, are expected to be active in 2009, compared with an average 40 per cent last year.
"It`s pretty grim," Don Herring, association president, said of the 2009 forecast. "We will see some companies disappear, and in all likelihood it will be some of the smaller ones. In particular, it will impact companies that aren`t well-positioned financially."
The association expects industry will drill 8,787 oil and gas wells this year, compared with 16,844 wells last year.
Low natural gas prices -- which drive the bulk of drilling activity in Western Canada --and a surplus of supply have pulled down capital budgets on both sides of the border, prompting companies to shut in completed wells and hold off drilling new ones.
The drilling industry already has lost more than 15,000 jobs from a workforce of 70,000 since the end of 2008.
Tuesday`s forecast was the association`s third revision this year, down from a suggested 11,176 wells predicted in April and 14,325 wells forecast in October. This latest forecast assumed an average $75 US per barrel of oil and $5 per thousand cubic feet of natural gas.
Read the full article here.