Canadian Association of Oilwell Drilling Contractors rig utilization rate holding strong


Stacey Lee


Despite an ongoing personnel shortage, the Canadian Association of Oilwell Drilling Contractors rig utilization rate is holding strong.


As the CAODC closes out the first quarter of 2012, VP of Operations Nancy Malone says the rig utilization rate is resting at 68 per cent, exactly as it was last year at the same time. She adds that the association has predicted 2012 to mirror 2011 through the second and third quarters.


“The second quarter of ’11 had a utilization rate of 24 per cent, which is actually pretty good… but our third quarter was the strongest ever on record because we were catching up with all that work that got either drowned or burned out in the second.”


The fiscal fallout of the 2009 global recession left the CAODC with the lowest rate it had ever seen.


“The first quarter of 2009 our utilization rate was at 37 per cent and the annual, over the course of the year, was at 25 per cent. Q1 is always the busiest, and Q2 is always the worst. Fifty per cent is the economic bottom line, so to have less than half your rigs working is very rough.”


Malone says that, for the association, 2010 and 2011 were both recovery years.


“We’ve had some very strong levels of activity… but we still aren’t where we would like to be… back to where we were in 2005 (83 per cent) and 2006 (90 per cent).” While the association’s fleet was smaller at that time, just 725 drilling rigs, just under 600 rigs were working.


At the start of 2012, utilization


was up by a meager two. Oil numbers had jumped 11 points, from 409 (2011) to 420, while gas had dropped by 9 sites (201 in 2011 down to 192).


By February, as activity always does in Alberta, utilization had jumped dramatically to 1,183 overall. That, however, is still down from 1,238 during the same time period in 2011.


Malone’s expectations for the remainder of the year are no surprise.


“It is hard to predict because last year, like this one, was an unusual spring. We had a lot of floods and fires. It is also hard to predict when spring break up will end, and our equipment is going to be back to work. Typically we are happy if we are back to work by the May long weekend, that is a good marker for us.”


Malone says the CAODC will be happy with its prediction of a “flat year.”


That said, the VP suggests an even higher rate could be realized should more workers, with long-term goals, join the industry.


“Some of the equipment wouldn’t be used because it is not appropriate for the work that is going on right now… and will be sitting anyways. There is a portion of that unused equipment that could be working, but each rig needs 16 people (minimum) to run. We would also need at least 50-60 per cent of those workers to be experienced.”


She points out that, with the nature of the industry and danger associated, it is necessary to ensure that skilled/highly trained personnel are managing rigs and that the necessary manpower isn’t available right now.


“We simply cannot crew any more rigs. There is work available and rigs are sitting because we simply don’t have the experienced labour to get them working. We lost a lot of trained talent during the downturn to different industries.”


She suggested the flood of ads featuring drilling or service rig jobs are targeted at reattracting the “talent” lost back in 2009-10.


“There are experienced drillers and derrick hands out there working in different industries, and the challenge is letting them know that there is work and that it is going to be steady.”


The CAODC promotes itself as a “unified voice” to the drilling and service rig industry in Canada, and rightfully so. ninety-eight


per cent of drilling activity in the Country in 2011 was conducted by the CAODC.


Through its four divisions the CAODC includes 39 drilling companies operating a fleet of 809 land –based rigs, two offshore drilling companies operating a set of four rigs near Newfoundland, 70 service rig companies charging 1,107 units, and 204 associate members such as brokerage houses and investment analysists with an interest in the drilling industry.


Although Malone indicates a 100 per cent utilization rate is unlikely, she did admit that “Canada is being well taken care of” by the equipment and individuals dedicated to continuing a strong tradition of leadership and cooperation.


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