The number of drilling rigs operating in B.C. in July was down 30 per cent compared to this time last year, according to new data from an industry group.
The weak July follows on depressed drilling rates in 2015 as the industry copes with the oil price collapse that began late last year. However, the data suggest that B.C.'s oil patch is faring better than the rest of Western Canada.
In July, 27 of the 83 drilling rigs in B.C. were actively drilling, or 32.5 per cent—down from a utilization rate of 62.3 per cent in July 2014, according to the Canadian Association of Oilwell Drilling Contractors (CAODC).
This time last year, 48 of the 77 rigs in B.C. were actively drilling. The overall number of rigs in B.C. has fluctuated from a low of 72 in January to a high of 83 in May and July. The rig count peaked at 80 last year.
The CAODC estimates one active drilling rig creates around 135 jobs.
Drilling rates were also down during the first quarter of 2015, typically the most active time for drilling. The first three months of 2015 saw rig utilization rates of 72, 64.8 and 53 per cent, respectively, compared to rates of 79.2, 82.8 and 82.5 per cent during those same months in 2014.
While down from last year, those rates are well above Western Canada as a whole. Utilization rates peaked at 48.4 per cent in January, and only 24 per cent of rigs in Western Canada were drilling this month.
Progress Energy, the upstream subsidiary of Petronas, has been the most active driller in northeast B.C., as it gears up to supply the Malaysian company's proposed Pacific NorthWest LNG terminal on B.C.'s west coast.
The potential for new Asian markets has shored up drilling in B.C. to some extent, the CAODC's John Bayko wrote in an email to the Alaska Highway News.
"The development of LNG facilities in BC are longer term initiatives and therefore less subject to the current price volatility of oil which is decreasing utilization levels in [Western Canada]," he said.
"In the event, however, that any of the proposed LNG projects move forward with actual physical development, the impact on drilling in B.C. would likely be a positive one."
The CAODC released a bleak forecast in June, noting that total operating days have fallen to 50 per cent of 2014 levels, threatening nearly 25,000 jobs. Since September, the price of a barrel of industry benchmark Brent crude fell from over $105 to $53.52. Natural gas prices are typically indexed to oil prices.
The CAODC expects to release its 2016 drilling forecast in November.
—with files from Daily Oil Bulletin