President’s Message June 2018

Hope on the horizon?

President’s Message by Mark Scholz

Just over two years into the Oil Respect campaign and wow, have things changed. Back in February of 2016, Canada’s oil and gas industry was entering the depths of a recession. The price of crude oil was just over $30 USD per barrel. April and May of ’16 would be the worst months on record for CAODC members, with utilization levels at six per cent. To make matters worse, the sentiment toward the industry in Canada was seemingly at an all-time low. International celebrities were pointing fingers directly at Alberta’s oilsands as a proxy for catastrophic climate change. Governments around the world were calling for strict and immediate reductions in the use of fossil fuels through vehicles such as the Paris Agreement.

Over the next 18 months our industry continued to take a beating in the press, and on the TSX. The Oil Respect campaign would be on the road hosting over 75 events, but for every one of those booked, we had at least two or three failed attempts to organize events at schools, chambers of commerce, rotaries, and other organizations we approached across the country. Trade schools didn’t want to host us because our message was too controversial; chambers in other provinces didn’t want to host us because they didn’t support our industry; different industry companies didn’t want to host us because they didn’t want to risk any political capital. Amid this climate of ambivalence we still crossed the country twice, delivering our message: Canadian oil and gas, and the men and women who work in it, have a lot to be proud of.

Throughout this time, the outlook for our sector was bleak and the exodus of foreign investment reflected it. According to an April 25th article by Erik Hertzberg in the Financial Post, in 2017 investment in the oil and gas sector fell by 12.2 per cent to $120 billion, making it the largest decline in at least 17 years. International E&P giants such as Royal Dutch Shell and ConocoPhillips made headlines by pulling significant investments out of Canada. Dark days indeed.

But fast forward a few years however, and the Canadian oil and gas landscape is, at least in theory, quite a bit different. After ruling out several other transportation options, the federal government has, rightly or wrongly, stepped in and purchased the Trans Mountain Expansion pipeline project from Kinder Morgan. The provincial NDP government in Alberta is also firmly behind building the pipeline, and has also pledged financial support if needed. Both Prime Minister Trudeau and Premier Notley have recognized the importance of the oil and gas industry to the Canadian economy, and federal finance minister Bill Morneau has emphasized the importance of TMX in terms of jobs and GDP. Additionally, the price of oil seems to have stabilized at over double its 2016 low.

Perhaps most importantly though, there appears to be a shift in public opinion about Canadian oil and gas. Paid protest groups like Leadnow and Greenpeace are still grabbing headlines, but those headlines are now shared with regular hardworking Canadians who are showing up, often in numbers, and countering the misinformation. It has been incredible to see such great support across the country as people come out on their lunchbreaks, and even during office hours, making the time to say ‘enough is enough’ and stand up for our industry.

While CAODC members are still struggling with depressed day rates and lower activity levels, and it may be a stretch to say the worst is over, there are signs of hope on the horizon. Let’s keep up the hard work advocating for our industry, and continue to be proud of what we do.

Mark Scholz is president of the Canadian Association of Oilwell Drilling Contractors. He can be reached at [email protected]