Alberta Premier Jason Kenney speaks at the Canadian Association of Oilwell Drilling Contractors meeting in Calgary, Alta., Wednesday, Nov. 13, 2019.THE CANADIAN PRESS/Jeff McIntosh

Premier vows to fight for oilpatch as drillers forecast almost no growth in 2020

The CAODC said it expects the Canadian drilling rig fleet to continue to shrink

Premier Jason Kenney vowed Wednesday to keep fighting for Alberta’s slumping oil and gas sector as the industry unveiled another disappointing drilling forecast and criticism surfaced from an unlikely source, the Swedish central bank.

A sold-out crowd applauded several times as Kenney listed his government’s pro-industry moves and ended a 30-minute lunch hour speech with a stinging rebuke of Bloc Quebecois Leader Yves-Francois Blanchet’s most recent criticism of Alberta’s oil economy.

“These are very challenging times and I know that is felt more in the service sector amongst drillers and contractors than perhaps any other part of Canada’s energy industry,” he said at the downtown Calgary event organized by the Canadian Association of Oilwell Drilling Contractors.

“You know that the rig fleet is at its lowest levels since 1977, or second-lowest level, and operating days for rigs are at their third-lowest level since 1990. And the workforce in your industry is one-third the size of 2014.”

In its forecast Wednesday, the CAODC predicted a total of just nine more wells are expected to be drilled in Canada in 2020 compared with 2019, taking the total number to 4,905. That’s less than half the 11,226 wells drilled in 2014.

The stand-pat forecast is more positive than one released two weeks ago by the Petroleum Services Association of Canada, which called for a 10 per cent drop in wells drilled next year to 4,500, down from 5,000 wells this year.

The CAODC also said it expects the Canadian drilling rig fleet to continue to shrink, dropping by 48 from 545 to 497 drilling rigs, as the projected number of operating days increases slightly. It estimates each working rig supports 145 direct and indirect jobs.

Meanwhile, in a post on its website on Wednesday, Martin Floden, deputy governor of the Swedish central bank Riksbank, said the bank has recently sold bonds issued by Alberta, as well as those from the Australian states of Queensland and Western Australia, because of those governments’ “large climate impact.”

He said the decision was in line with a board directive to consider sustainability aspects in investment decisions.

Kenney didn’t take reporters’ questions at the event but spokeswoman Christine Myatt provided an emailed comment later which defended the environmental standards of Alberta oil and gas.

“If the Swedish central bank is really concerned with making a difference on climate change they need to be investing more in ethical producers such as Alberta which have shown dramatic gains in reducing emissions,” she said.

“This is especially true for Alberta’s potential in exporting LNG to displace coal in developing economies.”

The Swedish banker’s comments were pointed out by Keith Stewart, a senior energy strategist with Greenpeace Canada.

“Central bankers aren’t your typical treehuggers, so Canadian politicians should take note when they start blacklisting government bonds over climate concerns,” he said in an email.

“No amount of taxpayer money spent on war rooms or McCarthy-like inquiries will stop the coming transition off fossil fuels, which is why we need our governments to get behind a strategy to ease the pain for workers and communities currently dependent on oil while ensuring Canada is ready to prosper in a low-carbon future.”

Sentiment in the Canadian oil industry is nearing all-time lows since the federal election which returned the Liberals to lead a minority government, said CAODC chief executive Mark Scholz.

He said the industry has lost an estimated $30 billion in foreign capital since 2017, leading to layoffs and the relocation of at least 29 high-performance drilling rigs, several service rigs and their crews to the United States to find work.

Last week, the Alberta government said it would try to spur more drilling by exempting production from new conventional wells from the oil curtailment program started last January to try to better balance production with pipeline capacity.

Kenney said it’s hoped that will allow hundreds of more wells to be drilled this winter.

Dan Healing, The Canadian Press

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