A trickle of Canadian oil-drilling rigs heading south of the border this year has turned into a steady stream – a movement of equipment the energy industry says it hasn’t seen in decades.
The United States’ booming oil plays are a potent enticement as Canada’s energy sector struggles to regain the activity and investment it had before the oil-price crash four years ago. And U.S. President Donald Trump’s full-on embrace of U.S. energy independence and his administration’s loosening of environmental rules has been a shot in the arm for his country’s oil and gas industry.
The opportunity for more work, along with the partial or full payment of moving costs, are driving Canadian companies south. At least half a dozen Alberta drilling firms are sending some of their most powerful and newest technology rigs – and sometimes crews – to the United States.
“It shows you how Canada is kind of missing out on the rebound the U.S. is enjoying,” said Precision Drilling Corp. chief executive Kevin Neveu regarding his firm’s decision to move a $25-million rig from Alberta’s Deep Basin to the Marcellus play in Pennsylvania in the weeks ahead.
Already, firms such as Akita Drilling Ltd., Trinidad Drilling Ltd. and Ensign Energy Services Inc. have said they will make similar moves. Savanna Energy Services Corp. relocated a rig and crews from Canada to Texas early this year.
Now joining the migration is Citadel Drilling Inc., which said this week that it’s transporting three of its fleet of six drilling rigs to the Permian Basin. The three rigs are being outfitted for heat instead of cold and some crew members will also be moved to West Texas.
“We’re not generating profits for our shareholders. We’re treading water financially, at best,” said chief executive Dan Hoffarth, saying the small private firm with about 100 employees agonized over the decision.
He cites the “self-imposed” issues that are hindering investment in Canada, including a lack of pipeline access that weakens the price that oil producers can get for their products, carbon taxes and legislation that would prohibit tankers from carrying crude from ports in northern B.C., while oil imports from overseas flow freely into Canada.
“This was a need, not a want,” Mr. Hoffarth said of the move to the United States.
For its part, Precision already has major U.S. operations. In the past, however, the public company had said it would not move Canadian equipment across the border. But Mr. Neveu said activity for Precision in the United States is 75 per cent of what it was from the peak in 2014, while Canadian activity is about one-third of what it was. Long in the business, Mr. Neveu said this is the first time he has seen Canadian equipment move to the United States in any significant way since the 1980s – the days of the National Energy Program.
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