A new study shows that the total number of companies producing oil and gas in Western Canada has fallen by 17.5 per cent in the four years since global oil prices began crashing at the end of 2014.
Consulting firm XI Technologies of Calgary says an analysis of its database shows that a total of 1,334 active companies — publicly traded, privately held and foreign-owned — reported oil or gas production in December 2018.
That’s down 282 from 1,616 in the same month four years earlier, a period in which investor confidence was strained due to low oil prices which bottomed out in late 2016 and by oil discounts last year blamed on a lack of pipeline capacity.
XI data solutions specialist Shovik Sengupta says the data points to a period of significant consolidation in the industry.
Tom Pavic, senior vice-president with Calgary-based Sayer Energy Advisors, says the missing firms are likely predominantly small players that haven’t had the financial backing needed to drill today’s expensive unconventional oil and gas wells.
The trend is consistent with a 31-per-cent decline in the number of senior publicly traded energy companies listed on the Toronto Stock Exchange and a 44-per-cent falloff in the number on the TSX Venture Exchange over the past four years.
Direct employment in Canada’s oil and gas sector is expected to fall by more than 12,000 jobs this year, according to a new report from PetroLMI.
The number of workers is forecast to drop to about 173,300 in 2019, a decline of 23 per cent from 226,500 in 2014, according to the 2019 labour market update published Monday.
PetroLMI, the labour statistics information division of Energy Safety Canada, says about 12,500 jobs are at risk this year due to factors including low commodity prices, a decline in investment spending and uncertainty about getting oil and gas to market due to full export pipelines.
“As we’ve been saying for several years, the oilfield services sector has been severely damaged, and 2019 will be the same if nothing changes,” said CEO Mark Scholz of the Canadian Association of Oilwell Drilling Contractors.
The report comes as Alberta enters its fourth month of government-ordered oil production curtailment designed to free up pipeline space and reduce stored barrels blamed for steep price discounts last fall.
© 2019 The Canadian Press