Dear fellow Canadians, Canada’s oil and gas workers need your help.
The perfect storm has turned into the perfect tsunami for the Canadian oil and gas industry.
After five years of battling anything and everything we thought humanly possible, the once-in-a-lifetime combination of an oil price war between Russia and Saudi Arabia, and a global pandemic of unknown proportions have left oil and gas families with next to nothing. Pricing for a barrel of Western Canadian Select is less than the cost of a footlong sub as we near the end of Q1 2020, and the companies that employ and support hundreds of thousands of Canadians across this country are decimated.
Since 2014, well over 200,000 hard working men and women have lost good jobs. In the drilling and well servicing sector, over that period of time, we have lost 22 companies and nearly 600 rigs. These companies are the backbone of rural communities in Canada, and each of their rigs provides direct and indirect employment for 175 people. The numbers are staggering, and the impact is deep.
Canadian oil and gas workers are proud people. The industry they built is currently helping our country endure one of the most difficult health crises the modern world has ever seen. Reliable and secure energy supplies mean hospitals aren’t worried about intermittent power, and airlines are at the ready to re-patriate stranded Canadians around the world. The tax and royalty revenues, and transfers from west to east underpin the universal healthcare system and facilities we have available to help us withstand this crisis from Tofino to St. John’s. From 2000 to 2018, the Canadian oil and gas sector contributed over $359 billion in direct federal and provincial revenues alone, and that number becomes more impressive when personal income tax and other individual contributions by the hundreds of thousands employed in the sector are accounted for.
But now, on the foot of collapse, our industry needs a hand up. The federal government has stepped in and proposed to backstop wages for Canadian companies up to 75 per cent, which is excellent news. This means many layoffs will be avoided and it will help organizations withstand the sudden and hopefully short-term shock of the COVID-19 pandemic. Our services sector, however, is in a category of its own when it comes to damage. After five years of a downturn, and many critical wounds, we have nothing left with which to fight, and that is why I am asking the Prime Minister to implement specific polices to save our industry.
Specifically, the Canadian drilling and service rig sector needs the federal government, to introduce a payroll relief plan. We’re also asking the federal government to purchase our accounts receivable, at a discount. Doing this would give our companies instant cash flow and the federal government could collect these debts at a profit as oil prices recover.
These initiatives will give our industry a fighting chance to survive while we wait for the construction of pipelines like Line 3, Keystone XL and Trans Mountain. In the meantime, we expect oil prices to recover, and with it, the need for drilling companies.
So yes, our survival is important. We know that energy markets continue to evolve, and that over time consumers will drive a transition to other forms of energy, but for the foreseeable future the world will still need Canadian oil and gas. Canada relies on it too.
Oil and gas is still Canada’s largest export. It creates jobs and prosperity for all Canadians. The oil and gas industry has created hundreds of billions of dollars in revenues for Ottawa and the rest of Canada. Now, we’re asking for a very small amount of that back.
Mark A. Scholz, President & CEO, Canadian Association of Oilwell Drilling Contractors
Kevin Neveu, President & CEO, Precision Drilling Corp.
Bob Geddes, President & COO, Ensign Energy Services Inc.
Danial Halyk, President & CEO, Total Energy Services Inc.
Alex MacAusland, President & CEO, Western Energy Services Corp.
Karl Ruud, President & CEO, Akita Drilling Ltd.
Kevin Krausert, President & CEO, Beaver Drilling Ltd.
Duane Carol, President & CEO, DC Drilling Ltd.
John Rogers, President & CEO, Twilight Drilling Ltd.
Mike Gering, President & CEO, Diamond Energy Services Inc.
Kirk Grimes, President & CEO, Grimes Well Servicing Ltd.
Scott Darling, President & CEO, Performance Energy Services Inc.
Brad Rowbotham, President & CEO, Roll’n Oilfield Services Ltd.
Jason Hemsing, President & CEO, Bonanza Drilling Inc.
Ed. Note: The Canadian Association of Oilwell Drilling Contractors submitted this open letter to the National Post on April 6, and provided it to Pipeline News on April 7.