Rig Activity in 2022
Rig counts in Canada were remarkably steady for the past few months, with anywhere between 200 and 220 rigs drilling since July. This is only marginally lower than a peak activity of 231 active rigs in the winter of 2022.Rig counts in Canada were remarkably steady for the past few months, with anywhere between 200 and 220 rigs drilling since July. This is only marginally lower than a peak activity of 231 active rigs in the winter of 2022.
The Canadian drilling rig fleet shrunk from 801 rigs in 2015 to 444 available rigs currently, and rig occupancy is still around 48% now, similar to the 54% rigs active at the beginning of 2015. So with half the fleet, we are at similar occupancy rates. Productivity is certainly higher, with more meters drilled per day, and more wells drilled per rig, but drilling activity as a whole is lower than previous normal years (outside of Covid and one crisis or another).
As the fleet dwindles, while activity is relatively high, utilization rate reads higher. At 54%, the ratio between active and racked rigs is the highest it’s ever been (outside of the winter season) these past 7 years.
With the steady numbers observed over the past 6 months, at a time when oil prices were very palatable for producers, and with more appetite to spend on drilling, one has to wonder if this is a ceiling forced by available workable rigs, crews, or other services. It will be interesting to see where the rig count will go during the busy winter season.
2022 was a strong one when compared to the last 3 years, but active rig numbers are below recovery times like the ones seen in 2017-2018. Some trends can be observed when looking province by province, with BC numbers weak in the aftermath of the Blueberry decision and the subsequent licensing freeze. At the same time, a favorable provincial government in Saskatchewan pushed drilling activity up in that province. Alberta still generates the bulk of activity, but the seasonal cyclicity is muted, with fewer large winter drilling campaigns in oilsands delineation and more year-round access to multi-well pad drilling locations.
You can see a couple of pre-Christmas activity rush examples in 2016 and 2017, followed by strong winters in 2017 and 2018. If that is an indicator of capex directed to new drills, the flat trend seen so far this year would indicate a lackluster winter season in 2023. There are still a couple of weeks left this year to observe if the trend swings.
We notice growth in year-over-year rig activity comparison, staring with Q2/2021. The rate of growth is slowing down, be it because balancing of supply/demand or service capacity maxing out. It remains to be seen for how long we will be riding the current boom.