Market Snapshot: Canadian – and North American – rig counts reach record lows
Release date: 2020-07-15
Last year on 28 June there were 84 rigs drilling for oil in Canada; one year later on 26 June 2020, there were only 4 rigs drilling for oil. This is the lowest number since at least 1998 when separate data for oil drilling and gas drilling first became available. More recently, on 10 July 2020 there were 6 rigs drilling for oil in Canada.
In June the number of rigs drilling for either oil or gas averaged 18 per day, the lowest number since at least 1964, when data for all Canadian drilling was first recorded. Global investment in oil and gas has decreased significantly because of much lower oil prices. The main reasons for the price decrease are COVID-19 containment measures and disagreements between OPEC and Russia regarding production limits. The number of rigs drilling for oil in the United States (U.S.) has decreased for 17 consecutive weeks. On 13 March 2020 there were 683 rigs drilling for oil compared to only 185 on 2 July 2020; a 73% decrease.
Figure 1. Rigs drilling for oil in both Canada and the United States 2011-2020
Source and Description
Source: Baker Hughes
Description: The line chart displays the number of rigs drilling for oil in both Canada and the U.S. On 2 July 2020 there were 6 rigs drilling for oil in Canada, down from 80 one year ago. On 2 July 2020 there were 185 rigs drilling for oil in the U.S., down from 788 one year ago. Rigs drilling for oil display a seasonal pattern in Canada. In 2019, rigs drilling for oil increased from 17 at the beginning of May to 84 by the last week of June. Over the same time period in 2020, rigs drilling for oil in Canada decreased from 7 to 4.
Canadian oil rig activity differs from the U.S. because Canadian drilling is largely seasonal. Rigs are prevented from moving to new drilling sites in the spring, in part because the ground is thawing, making access for heavy equipment difficult, but also because provinces prohibit movements of heavy loads on many roads to prevent road damage.Footnote 1 In a normal year, the rig count will fall 85-90% from its peak in the winter to its minimum in April and May. However, this year Canada’s rig count fell by 98% from its height of 172 to only 4 active rigs and has not begun its usual summer increase.
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