JANUARY 24, 2020
PIPELINE NEWS NORTH •
Fort St. John Petroleum Association President Dustin Stirling with Cameron Eggie of the Fort St. John Salvation Army, Jan. 14, 2020. A $1,070 donation will help support the perishable food recovery program, which collects between 800 to 1,300 pounds of food each day from local grocers. | Matt Preprost Photo
Petroleum club donations to help residents in need The Fort St. John Petroleum Association made visits to the Salvation Army and the Women’s Resource Society on Tuesday to donate $2,140 in support of their important community work. The funds were raised by members last fall through the raffle of an old gun safe the club no longer needed. Don Stirling won the raffle and the Salvation Army and Women’s Resource Society received $1,070 each. Club members raised double the value of the safe, President Dustin Sterling said. The club executive chose the two social agencies for their community work and ongoing need to support the city’s less fortunate, he said. The Salvation Army will put its funds toward the perishable food recovery program, which collects 800 to 1,300 pounds of food a day from local grocers. That helps feed 509 families who use the food bank every month. The Women’s Resource Society will keep staffing and supporting its outreach store, which saw more than 5,500 visits in 2019, and provides free food, clothing, and other essential items for women and families in need.
Fort St. John Petroleum Association President Dustin Stirling with Lisa Jewell and Amanda Trotter of the Women’s Resource Society, Jan. 14, 2020. A $1,070 donation will help to staff and support the Society’s outreach store. | Matt Preprost Photo
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Horgan: Coastal GasLink ‘will be proceeding’ In his first press conference of the year, B.C. Premier John Horgan confirmed that the Coastal GasLink pipeline project – critical to the success of LNG Canada’s multibillion-dollar refinery facility in Kitimat – will be moving forward. “There are agreements from the Peace country to Kitimat with Indigenous communities that want to see economic activity and prosperity take place. All of the permits are in place for this project to proceed. It will be proceeding,” Horgan said on Monday, Jan. 13. His remarks come as the project faces ongoing protests and opposition from Wet’suwet’en hereditary chiefs. Hereditary chiefs say they have submitted a formal request that the United Nations monitor Royal Canadian Mounted Police (RCMP), government and Coastal GasLink actions as work on the project resumes. They claim RCMP have increased their presence in the area, and have been conducting fly-overs, drone surveillance and foot patrols. Meanwhile, RCMP are conducting an investigation into dangerous traps along Morice West Forest Service Road, southwest of Houston, B.C., after patrols found trees precut for felling and stacks of tires containing jugs of fuel. The Morice West Forest Service Road and Morice River Bridge located 47 km southwest of Houston - are the location of an ongoing blockade by Wet’suwet’en hereditary chiefs and their supporters against development of the Coastal GasLink natural gas pipeline through the area. On Jan. 3, the Wet’suet’en hereditary chiefs and members of the Unist’ot’en camp issued an “eviction notice” to workers at camp 9A and the surrounding area. RCMP said they have brought their concerns to the Wet’suwet’en hereditary chiefs and have launched a criminal investigation under Section 247 of the Criminal Code for traps likely to cause bodily harm. Consent and majority rule in the age of UNDRIP When elected leaders of the Wet’suwet’en First Nation voted to approve more than $300 million in benefits agreements with Coastal GasLink Pipeline Ltd., they did so with the confidence that the majority of their people supported the project. Polling suggested that more than 80% supported the project and the benefits it would
Signing up for shared prosperity. Forum focused on potential benefits of UNDRIP for business and first Nations. | Rob Kruyt Photo
bring, according to Theresa TaitDay, a Wet’suwet’en hereditary chief. But Wet’suwet’en governance is a bit like a constitutional monarchy: it has five democratically elected band councils, but it also has 13 unelected hereditary house chiefs, several of whom oppose the project. It’s uncertain whether majority rule applies under such a system, and it’s unclear whether the recently adopted United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) will do anything to address that fundamental dilemma. While the courts and provincial government recognize the elected band councils as the legitimate representatives of the Wet’suwet’en, the B.C. human rights commissioner, the United Nations, environmental organizations and a number of other groups – including the BC Government and Service Employees’ Union and Union of BC Indian Chiefs – have all thrown their support behind the unelected hereditary chiefs who oppose the project. In hindsight, if Wet’suwet’en leaders who support the project had taken a page from the Tahltan Nation, the uncertainty over who rightfully represents the Wet’suwet’en might have been avoided. At a forum in January on UNDRIP and the opportunities it might present for business, a number of success stories were highlighted to illustrate what can be achieved when the spirit of UNDRIP is applied.
One of those success stories is the relationship the Tahltan Nation has with industry, especially mining. There are several operating mines and a number of potential mines under exploration or development in traditional Tahltan territory in northwest B.C. – the so-called Golden Triangle. From the Tahltan experience it is clear that it is not just incumbent on government and industry to consult with First Nations; it is also important for First Nations leaders to get the consent of their own members when approving resource development projects. A central UNDRIP question is the principle of First Nations consent, including the question of who can grant it. “There is consent amongst your own community,” said Chad Day, president of the Tahltan Central Government. “That’s a very tricky thing. “It’s one thing to get the consent of an Indigenous government. And as we see with some examples around the province … getting the consent of the government and getting the consent of the people on the ground are two very different things.” And it can be very tricky indeed when there are dual governance systems, as is the case for the Wet’suwet’en. While their five clans have elected band councils, they also have a hereditary chief system. In addition, there is the Office of the Wet’suwet’en, which was set up to
represent hereditary chiefs in treaty negotiations. The hereditary chiefs say the elected band councils have governance authority only on reserve land. Outside reserve land, hereditary chiefs represent their people on issues like treaty negotiations, they say. But the Tahltan also have a clan system, and in 2005, a dispute similar to the Wet’suwet’en’s erupted when elders disagreed with the Tahltan Central Council’s support for the Fortune Minerals anthracite coal exploration project. The Tahltan appear to have addressed the thorny issue of consent by doing a thorough job of consulting within the community and holding votes. When a project is being considered, Day said, the Tahltan government goes to 16 of its communities in B.C. and the Yukon and eventually holds a ratification vote. “Everybody can respect that. Even people that really don’t like me or like our government or like the decision, they respect the fact that we informed our members properly.” No such ratification vote was held within the Wet’suwet’en, Tait-Day said although some polling was done. “The Moricetown Band canvassed the community,” she said. “Eighty-seven per cent wanted the project to go.” With a report from Hayley Woodin and Nelson Bennett in Vancouver
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Using electrolysis, with the electricity supplied from wind and hydro power, the hydrogen atoms are split off from water molecules to produce pure streams of hydrogen and oxygen. | Renewable Hydrogen Canada
Green hydrogen plant in Chetwynd project has investor NELSON BENNETT The green energy investment arm of Macquarie Capital will finance a new $200-plus million renewable hydrogen plant in Chetwynd, says project developer Juergen Puetter of Renewable Hydrogen Canada (RH2C). Macquarie Capital’s Green Investment Group is one of three partners in a consortium that includes FortisBC and RH2C. RH2C is also partnering with a First Nation greenhouse business – Sundance Produce – that will use waste heat from the electrolyzer plant in Chetwynd for greenhouses. Under the consortium, RH2C will build an electrolyzer plant in Chewtwynd, at a cost more than $200 million, Puetter said. It would produce 60 tonnes of hydrogen per day. FortisBC will be the customer for the renewable hydrogen produced, and Macquarie will provide the investment capital.
A dedicated wind farm will also be built to provide the power for the plant, said Puetter, who is also CEO of Aeolis Wind, which built the first wind farm in B.C. – Bear Mountain. “There is a separate wind project that will supply the energy and that will be financed separately, and we have partners for that too,” Puetter said. “I have different partners. It won’t be Macquarie and it won’t be Fortis.” Puetter said the dedicated wind farm would provide most of the power, but said the project would also need to buy hydro power from BC Hydro. There is a potential new market in B.C. for renewable hydrogen, which the provincial government is expected to qualify under CleanBC’s renewable natural gas policies. Under those policies, suppliers like FortisBC will be required to increase the renewable content of its natural gas to 15%. Renewable natural gas is
currently produced primarily from landfills and dairy farms (biogas), and from wood waste (syngas). But hydrogen made from wind and water and then injected into the natural gas stream could also count as renewable. Using electrolysis, with the electricity supplied from wind and hydro power, the hydrogen atoms are split off from water molecules to produce pure streams of hydrogen and oxygen. This process for producing “green hydrogen” is much more expensive than producing “blue hydrogen” from natural gas, but it requires no fossil fuels, so various climate change policies – from carbon taxes to renewable content requirements, both of which will need to increase in stringency – are expected to eventually make green hydrogen competitive with blue hydrogen. Puetter said the cost of wind power has come down to the point where a dedicated wind farm
could produce power at a cost that is lower than what BC Hydro currently charges. And RH2C has a buyer – FortisBC. And since the electrolysis process generates heat, the waste heat will be tapped and supplied to Sundance Produce for new greenhouse development. There is just one hurdle to clear before the project can move forward, Puetter said: The project needs Enbridge Inc. to agree to allow hydrogen to be injected into their T-South pipeline, which supplies FortisBC with natural gas for southern B.C. The hydrogen injected into the pipeline would represent 3% of the natural gas stream. “Enbridge needs to agree, and the moment we have that, from that moment we are less than three years to having the gas in the pipeline,” Puetter said. — Business in Vancouver
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JANUARY 24, 2020
NorthRIver Midstream
NorthRiver Midstream acquires Enbridge business NorthRiver Midstream announced that it has closed its acquisition of Enbridge’s midstream business in Canada. The company now operates 19 natural gas processing plants and 3,550 kilometres of natural gas gathering pipelines across the
Montney region of British Columbia and Alberta. “With the strategic location of our operations across the Montney basin in British Columbia and Alberta, and the backing of a committed Canadian owner in Brookfield Infrastructure,
NorthRiver Midstream is built on an asset base that creates a robust platform for growth,” CEO Brandon Anderson said in a news release. “NorthRiver is driven by our values and committed to building a different type of energy company. We are focused on operating
responsibly, being present in communities and ensuring that we are looking at creative ways to deliver value to partners, customers and communities that are touched by our operations.” The company employs more than 700 people.
Northeast B.C. unemployment at 5.1% to end 2019 Unemployment in Northeast B.C. dropped nearly a percentage point in December, down to 5.1% to end 2019. There were 39,000 employed and 2,100 unemployed in region, according to the latest estimates released by Statistics Canada on Friday, Jan. 10. Unemployment in the region was recorded at 6% in November, with 2,500 unemployed. Year-over-year, however, the unemployment rate is up from 4.7% at the end of 2018, when 40,300 were working and 2,000 were unemployed. The region saw a wide swing in monthly unemployment
throughout 2019 — from a high of 9% in April to a low of 4.9% in July. The region’s unemployment was slightly higher than the provincial average of 4.7% in December. The North Coast and Nechako region recorded the lowest unemployment at 3.9%, while the Cariboo recorded the highest at 6.8% “In 2019, employment in British Columbia was little changed in the 12 months to December 2019, following four consecutive years of gains,” Statistics Canada reported. The provincial unemployment rate increased 0.4 percentage points to 4.8%, but remained the
lowest among the provinces, the agency said. The Canadian economy added 35,200 jobs in December, fuelled by a gain in full-time jobs, to post the first monthly increase in jobs since September. The national unemployment rate fell to 5.6% for the final month of the year, compared with a rate of 5.9% in November when the country lost 71,200 jobs, the biggest monthly loss of jobs since the financial crisis. The federal agency’s monthly labour force survey said the increase in the number of jobs in December came as full-time
employment rose by 38,400 jobs. The number of part-time jobs fell by 3,200. The goods-producing sector added 15,700 jobs, helped by a gain of 17,000 jobs in the construction industry, with British Columbia and Ontario contributing the most to the rise, Statistics Canada reported. Meanwhile, employment in manufacturing declined in both Ontario and British Columbia, while employment in natural resources declined in five provinces, most notably Alberta and British Columbia, the agency said.
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FSJ jumps three spots in best cities to work rankings Fort St. John is one of only two northern B.C. cities to make the Top 10 list of being among the best to work in B.C. Fort St. John climbed from No. 9 to No. 6 in BC Business magazine’s annual rankings for 2020, while Dawson Creek climbed from the No. 30 spot to No. 27. They’re minor gains after the cities lost considerable ground this year after spending several years in the top three. “Even with muted oil and gas prices, major energy infrastructure projects like the Site C dam have kept the region’s economic wheels turning,” BC Business wrote. “Couple that with high average incomes, inexpensive housing and—in Fort St. John’s case— generous household spending on recreation, and the Northeast remains competitively positioned.” Prince Rupert was the only other northern B.C. town to make the Top 10, dropping from sixth spot in 2019 to ninth place in 2020. The rankings are compiled based on a number of economic indicators, from income to unemployment rates, to how much residents spend on recreation and housing, among other factors such
The view from the Peace River Lookout. | Matt Lamers Photo
as housing starts, commute times, and real estate values. Squamish, Whistler, and Langley were ranked the top three cities. Other communities rounding out the Top 10 include North Vancouver, Kelowna, Salmon Arm, Nanaimo, and Courtenay. Fort St. John
income:
recreation: $6,439 Average shelter spending: $25,321 Average value of primary real estate: $381,422 Average commute in minutes: 15
Average household income under 35: $131,656 Five-year average household income growth: 18.1% Average household spending on
Five-year population growth: 6.6% Housing starts per 100 residents: 18.9
2019 rank: 9 Average household $138,185
Oil and Gas Commission working to ensure dam safety The BC Oil and Gas Commission has been working closely with BC Hydro since 2009 when the Commission undertook a study into any possible interactions between oil and gas development and the Peace Canyon Dam. Since then, the Commission has taken a leading role in the management and mitigation of induced seismicity since first identifying it in 2012. The report from the Canadian Centre for Policy Alternatives published Jan. 9, 2020 includes references to some of the work we have done in identifying and managing this issue, but only selectively. The following is intended to provide more context around the material presented and how it fits in with the actions undertaken by the Commission’s experts: • There is no record of any completion (hydraulic fracturing) activity near Peace Canyon Dam in summer 2007. • The Commission has been working closely with BC Hydro since 2009 regarding dam safety and stability and any potential impacts
of oil and gas development. • The development in proximity to the Peace Canyon Dam at that time, was shallow coal bed methane (CBM). There is currently no coal bed methane development happening in B.C. This type of development (shallow vertical wells) is entirely different from unconventional development we see in the Montney today (and there are no records of any induced seismic events in this area). • The disposal well referenced for Canada Energy Partners (CEP) was initially developed for the CBM play (which is not happening in British Columbia) and has never experienced any recorded induced seismicity. • The Commission first identified a cluster of induced events working with NRCAN in 2011 leading to the 2012 Horn River Basin Report and was the start of the Commission’s leading research into induced seismicity. • That led to expansion of the detection grid across northeast B.C. and the Commission’s first
permit conditions for induced seismic monitoring and mitigation (including shut down procedures). • The Commission published a subsequent 2014 Montney Report. • The Commission worked with the Ministry of Energy, Mines and Petroleum Resources as it established a five km buffer zone to prohibit future tenure sales and developed restrictions on fracturing/disposal activities on existing tenure within that area. • When notified of possible stability concerns around the Peace Canyon Dam, the Commission immediately ordered CEP to suspend all disposal activities. • Only after lengthy detailed review was CEP allowed to return to operations subject to numerous conditions (available on our website) which would ensure safety and integrity of the dam (CEP has not taken any further steps to meet the new conditions and therefore, the disposal well remains suspended). • The Commission established the Kiskatinaw Seismic Monitoring and Mitigation Area (KSMMA) in
2018 when it became evident that induced events could occur during fracturing in that specific area. • The protocols reduced the shut down magnitude and enhanced monitoring and mitigation requirements. It also required operators to inform residents who may feel events of what causes them and what to do if they occurred. • The CNRL event in Nov. 2018 was within the KSMMA – protocols worked and no damage occurred. • CNRL was allowed to resume operations only after the fault and trigger mechanisms were identified and a development plan and controls were established to mitigate any additional events – and it should be noted, resumption of activities is only for one well, not the one that caused the earlier seismic event. • The Commission continues to work with NRCAN, Geoscience BC and others in improving prediction and mitigation of events, and remains in constant contact with BC Hydro to ensure the safety of all operations
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Reasons for optimism in northern B.C. economy: Horgan
Premier John Horgan and a handful of ministers met with northern B.C. mayors Tuesday, Jan. 21, to tackle topics ranging from mental health and addictions to housing to the struggles in the forestry sector. | Prince George Citizen Photo
MARK NIELSEN Premier John Horgan and a handful of ministers met with area mayors Tuesday to tackle topics ranging from mental health and addictions to housing to the struggles in the forestry sector. By doing so, they had ventured into Opposition territory, Horgan acknowledged as he addressed local media following the meeting at city hall. “In no way do I want to diminish the hard work of those members of the legislature, but quite frankly we don’t hear from them about the positive initiatives that are happening in the community, we don’t hear from them about how we can work constructively to realize change,” Horgan said. “That’s no slight on the Opposition members. It’s just easier and better to have face-toface, direct conversations with local leaders so we can do a better
job as government on delivering on the services that people need in the region.” Horgan said the conversation during the morning centred on the challenges Central Interior communities have had dealing with homelessness combined with drug addiction and mental health and “how we can work together with local leaders to build stronger, more resilient communities.” Northern Health CEO Cathy Ulrich gave a presentation on how that agency has been approaching the issue, Horgan noted. “We’re working cooperatively, talking about best practices, we’re looking for a way forward. Not every community deals with the challenges in the same way,” Horgan said. Making sure a sufficient supply of housing for aging communities and how to make “more strategic investments over the short term” on that item was also raised,
Horgan said. In the afternoon, the discussion turned to the challenges the forest industry is facing, particularly in Quesnel and Mackenzie. Horgan said he also heard from Prince George Mayor Lyn Hall about how, as the hub for the region, the city needs investment in infrastructure “not just to service the people of this town but the people of the region.” Asked what his message is for displaced forestry workers, Horgan pointed to activity on the liquified natural gas, mining and technology fronts as reason for optimism in the regional economy. On the forest sector specifically, Horgan said the focus will have to be on maximizing the value of the logs harvested “rather than just shooting to get as much volume as we possibly can out of the forests into the mills or onto freighters and somewhere else.” “There are challenges in the
forests, we acknowledge that. They are not new, they have resulted over decades of a drive to liquidate rather than to build a roadmap to a future that’s sustainable for communities and sustainable for our forests,” Horgan said. Hall generally echoed Horgan’s comments, saying he “summed up quite well,” the topics discussed at the meeting. Hall also said he stressed bringing “more focussed service to the north” along with a need for the federal government to come to the table. For Horgan, the meeting ended a multi-day tour of the region that began in Kitimat and Terrace and went as far south as Quesnel and with stops in Vanderhoof, Mackenzie and Fort St. James along the way. Indeed, Horgan said an invitation to attend a doubleheader of midget hockey on the outdoor ice in Fort St. James over the weekend sparked the tour. — Prince George Citizen
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PIPELINE NEWS NORTH •
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Spillway and powerhouse construction at Site C, Sept. 17, 2019. | Matt Preprost Photo
B.C. cushioned by multibillion-dollar capital projects NELSON BENNETT During the Great Recession of 2008-09, British Columbia was insulated somewhat from economic disaster by billions of dollars spent on major public works projects leading up to the 2010 Winter Olympics. Spending on big projects like the Canada Line ($2 billion), the Richmond Olympic Oval ($145 million) and Sea-to-Sky Highway ($789 million) helped buffer B.C.’s economy from the steep downturn. And there is plenty of cushioning again, should the North American economy slip into recession in 2020, as some forecasters have predicted. In 2019, there was general slowing of global economic growth, and in B.C., exports from forestry and mining were down in the first three quarters by 18% and 5.6%, respectively, according to
Central 1 Credit Union. But again, major private-and public-sector capital projects – from pipelines to new subway lines and hospitals – will either start or be well underway in B.C. in 2020, providing a timely cushion should the U.S. and Canada slide into recession. “One of the big buffers already within our forecast is that we do have substantial capital investment spending,” said Bryan Yu, deputy chief economist for Central 1 Credit Union. “The big ones are the LNG Canada facility and the associated pipelines. Adding to that, it’s ongoing work on things like the Site C dam.” Central 1 is projecting B.C.’s economic growth will be 3% in 2020 – 1.5% higher than the Canadian average. This is despite a dramatic downturn in the forestry sector. BuildForce Canada forecasts that major projects in B.C. will create
13,000 new construction jobs between now and 2021. Central 1 estimates that without major energy projects like LNG Canada and Site C dam, B.C.’s growth next year would likely be 1% lower, Yu said. The LNG Canada project alone accounts for about 0.7% GDP growth next year. As of October 2019, 4,823 workers were employed on the $10 billion Site C dam project in the Peace River region. Roughly 1,000 workers were employed in the early stage of construction of the $40 billion LNG Canada project in Kitimat, and another 1,000 are employed on the associated $6.6 billion Coastal GasLink natural gas pipeline. About 2,200 people have been hired to date for the $7.4 billion to $9.3 billion Trans Mountain pipeline expansion, although those workers are spread across both B.C. and Alberta.
Hundreds of workers are also employed on the $460 million Central Utilities Building project at Vancouver International Airport, which is part of a $9.1 billion expansion taking place over the next two decades. In addition to big energy projects, preliminary work is also expected to begin on some large public works projects in 2020, like the $1.9 billion new St. Paul’s Hospital, the $2.8 billion Millennium Line Broadway extension, the $1.4 billion Pattullo Bridge replacement and the $600 million Kicking Horse Pass widening project. “We will start seeing more construction work occurring through this year as we’re ramping up to the full-on construction stage in late 2020, 2021,” Yu said. — Business in Vancouver
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Older drilling rigs are being delisted by several major drilling companies. | Brian Zinchuk Photo
Ensign, Precision, Nabors, Akita delist rigs BRIAN ZINCHUK Fewer drilling rigs were registered with the Canadian Association of Oilwell Drilling Contractors (CAODC) by the end of December than at the beginning, with notable delistings in the final month of 2019. “December is typically when companies are going to be doing their inventory,” said John Bayko, CAODC vice-president of communications. “And so, I’d say traditionally, because dues are due in January, if they’re going to be pulling anything off the books, they’re going to be doing it in December.” Last month, for example, Ensign Drilling Inc. delisted 17 drilling rigs, including 14 mechanical telescoping doubles built between 1993 and 2011, with depth capacities ranging from 3,000 to 4,000 metres. Other recently-delisted Ensign rigs included two mechanical
cantilever doubles (built in 1998) with 3,200- and- 3,500- metre depth capacities, respectively, and one mechanical cantilever triple built in 2005 with a 4,000-metre depth capacity. Precision Drilling Corporation delisted seven drilling rigs at the end of the year, including four DC cantilever triples with depth capacities of 3,400 metres, 4,200 metres, 4,500 metres and 5,000 metres, respectively. The other three delisted Precision rigs were mechanical slant singles, including two with depth capacities of 2,500 metres each, and one with a 1,500-metre depth capacity. Nabors Industries Ltd. delisted and took out of service six drilling rigs at the end of 2019, including four DC cantilever triple rigs (two with 4,000- metre depth capacities, one with a 7,000 metre depth capacity and one with a 5,300 metre depth capacity), as well as two mechanical telescoping doubles with 3,400 metre depth
capacities. Meanwhile, AKITA Drilling Ltd. delisted one drilling rig at the end of 2019, doing so for purposes of relocation to the United States. This AC telescoping double, built in 2016, has a depth capacity of 4,000 metres. The company has been shifting more of its drilling rigs to the U.S. market recently, and specifically to the Permian. By comparison, in December 2018 the CAODC reported seven delisted rigs in December 2018, with one of those going to the U.S. In December 2017, there were 12 delisted rigs, three of which went to the U.S. Most rigs that are delisted are taken out of service, rather than simply moved to other jurisdictions. “In terms of delistings in 2019, on the drilling side we had 78 delists, and on the service side we had 90,” Bayko said, noting that just eight of the 78 drilling rigs delisted this year were moved to other jurisdictions. Most are
retired. “[It’s] because there are no wells being drilled. Activity is so low.” He added, “If it’s older iron, then I think a lot of companies are anticipating that stuff is just never going to go back to work, and so they’re going to retire it.” According to CAODC’s 2020 forecast, released in November, Canada’s rig fleet for this year could decrease by 48 to 497. This week, the number of registered land-based drilling rigs as sited on the CAODC’s website was 517. Active drilling rigs as sited on the website this week totalled 214, which Bayko said shows a bit of an uptick so far in January. “We haven’t seen the positive side of 200 in a long time. We’re quite pleased with that, and hopefully things will keep moving in that direction.” — with files from Daily Oil Bulletin