CAOEC state of the industry: Finally, a recognition of energy security

By Brian Zinchuk

On Nov. 23, the Canadian Association of Energy Contractors (CAOEC) announced the release of its Q4 2022 and 2023 drilling forecast.

The forecast included:

Projected 2023 wells drilled: 6,409 – an increase of 827 from 2022 (5,582*)

Projected 2023 operating days: 70,495 – an increase of 9,091 from 2022 (61,404*)

Total jobs expected: 42,350, an increase of 5,437 year-over-year

“The future of energy runs through our workforce. Our members have the technical innovation and skills to be the world’s most carbon-efficient energy services sector,” said CAOEC President & CEO Mark Scholz in a release. “Canada is well known for our top-rated ESG standards, and countries around the world are asking for more Canadian energy. As noted in a recent CAOEC white paper ‘Leading Collaboration Through the Energy Transition,’ our members and their employees will remain critical as development continues for oil, LNG, natural gas, geothermal, helium, carbon capture utilization and storage (CCUS), in-situ hydrogen, and mineral extraction from brines. In 2023, we expect to lead the industry forward as we embark on the energy transformation.”

“2022 was an exciting year for the Canadian energy services sector following a seven-year industry slowdown. Drilling activity for oil and natural gas remained steady throughout the year with high commodity prices and modest improvements in capital markets,” Scholz added.

Asked Pipeline Online on Nov. 28 about the fact oil prices have fallen to below the levels at the start of the Ukraine war, and its impact on Canadian drilling, Scholz said, “I still think the fundamentals I think, are still very strong.

“I think these are, these are blips that certainly will come and go. But I think long term, I still think there’s just so much under supply across the globe, and the recognition, I think, finally, about energy security, and affordability is coming to the to the forefront of energy policy.

“Short and medium term, I think the prospects look very strong for the industry. But I also think, as we had kind of laid out in our in a white paper that we put together, is that there is an opportunity, I think for you know, for a pivot in the sector to start looking at other market options and I guess industries for our sector. And that is things like lithium, helium, into lesser extent, geothermal.”

He continued, “I think the sector finally is starting to turn a corner. We’re starting to see sustainability. kind of peek through on the oilfield services side. I think a lot of people are looking fairly bullish, I think for our sector for the next two to three years. Our forecast came out, we’re projecting a 15 per cent lift in activity, commodity prices that we pegged at US$82 for WTI. And the natural gas, our assumption was $3.19 of gigajoule Canadian AECO pricing.”

“We’re still kind of faced with some infrastructure issues here in in Western Canada with bottlenecks and trying to optimize some of those pipelines. But the other thing I think that’s going to really, really high grade natural gas for Canada is going to be Coastal GasLink nearing completion and LNG Canada, which is just going to be such a huge opportunity for us,” Scholz said.

Canada’s energy services sector is an integral part of the global energy production supply chain as Russia’s war against Ukraine threatens energy security abroad, the association noted, addeding, “CAOEC is hopeful discipline from OPEC and civility with crude prices will help prevent the industry from potential recession impacts in 2023.”

In 2023, tailwinds are expected with the completion of the Trans Mountain Expansion Project, a pipeline that will add 590,000 barrels per day to the market. Coastal GasLink is also anticipated to reach mechanical completion by the end of 2023, a project that will safely deliver natural gas to the first LNG export facility in Canada’s history, LNG Canada.

After years of lower activity levels, labour recruitment and retention remain a challenge to overcome in the energy industry. The association fully accounts for this barrier in the forecast, and anticipates more people will join the industry as it proves to offer competitive career opportunities for young people, Indigenous communities, and newcomers from coast to coast to coast. “We are at the epicenter of Canada’s energy transformation. It is our people that will lead the way forward,” Scholz asserted in the white paper.

The forecast calls for an increase of 827 wells from 2022, for a total of 6,409. The forecast also foresees an increase of 5,437 jobs, up to a total of 42,350 direct and indirect jobs which will be key in Canada’s net-zero future.

Below is a recording of CAOEC’s 2022 State of the Industry with address from Canadian Association of Energy Contractors (CAOEC) president & CEO Mark Scholz, and keynote speech by Danielle Smith, Premier of Alberta. Also included is an industry panel moderated by EPAC President & CEO Tristan Goodman, including Mike Belenkie, President & CEO of Advantage Energy, Jason Jaskela, President & COO of Headwater Exploration, and Lavonne Zdunich, Director Investor Relations at Precision Drilling Corp. Joe Dion, Chairman and CEO at Frog Lake Energy Resources Corp. provided an event blessing.