Drilling Rig Utilization Back To 2007/2008 Levels

With the fleet size down to its smallest size since 2006 and a 66% jump in the active count from the depths of 2009, drilling rig utilization rates in Western Canada this year are back to levels experienced in 2007 and 2008, Rig Locator records show.

Weekly surveys show an average of 348 rigs were at work over the first eight months of this year, up 66% from 210 active rigs for the same period in 2009. Despite the gain, the active rig count in 2010 is still the third lowest since 2000 topping only the 2009 and 2002 counts.

With the available fleet in western Canada down to 802 units, utilization has surged this year to 43% of the fleet compared to 25% a year ago and utilization rates of 45% in 2008 and 42% in 2007. The peak drilling activity years of 2005 and 2006 (when the fleet was smaller than this year) saw utilization rates of 65% and 67%, respectively.

By far the biggest activity increases this year are in the more oily provinces of Alberta, Saskatchewan and Manitoba as natural gas prices and drilling remains weak compared to prior years.

Alberta’s active rig count between January and the end of August averaged 214 units, up 73% from a year ago but still below all other years since the year 2000.

Saskatchewan’s active rig count is the highest since 1997 with an average of 64 rigs employed by operators to the end of August, up from only 32 a year earlier. And Manitoba is enjoying a mini-boom this year with a record nine rigs at work over the first eight months (including 18 rigs on the go in recent weeks).

British Columbia’s gas and oil fields are seeing a solid year of activity, as good or better than in all years except the gas drilling boom years of 2004 through 2006. An average of 61 rigs have been at work in the province to the end of August, a 22% rise from 50 rigs at work last year.

As of Aug. 31, 411 drilling rigs were at work, representing 51% of the available fleet. That is 203 more rigs active than at the end of August last year. But for shallower capacity rigs (less than 1 850 metres capacity), only 62 of 158 available units were at work this week – a 28% utilization rate.

Yesterday, 259 rigs were at work in Alberta, 126 of them targeting oil or bitumen projects and 117 targeting natural gas or coalbed methane.