CAODC Estimates 25,110 Oil Drilling Industry Jobs Will Be Cut This Year

$USO

The Canadian Association of Oilwell Drilling Contractors (CAODC) slashed its Y 2015 drilling forecast for a 2nd time Monday, forecasting that more than 25,000 jobs will disappear because of weak Crude 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 Y 2014 was 131,021.

As a result the CAODC estimates 25,110 jobs linked to the Oil 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 Crude Oil prices, which dove from more than $100 bbl last June to around 45 in March, as producers sought to drive down operating costs by renegotiating contracts with service providers.

US WTI Crude Oil (NYSEArca:USO) since recovered to just under 60 bbl, 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% from the same time last year and 53% below the 5 yr average.

CAODC President Mark Scholz said other factors, including the potential for Alberta’s new left-leaning government to change how Crude Oil producers pay royalties, means the outlook for drillers remains 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 Mr. Scholz.

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