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Global Energy Advisory - 2nd February 2018

Canada Oil

Canadian drillers are moving rigs to Texas chasing better business opportunities south of the border in yet another sign that the U.S. oil industry is in full growth mode. Naturally, the main destination is the Permian – the hottest spot in the American shale patch.

Demand for rigs is so high, Canadian drillers say, that some of them may not return to Canada despite the logistics. In fact, some U.S. clients are willing to take on the relocation costs of the rigs in a bid to attract more rigs.

According to drilling company executives, there is a feeling that the Canadian government is turning a blind eye to their woes, while Washington is supporting the industry, which is hardly surprising given President Trump’s energy dominance agenda.

Canadian pipeline capacity expansion is being stalled or challenged and production costs are rising, these executives say, making their job at home more difficult, while south of the border taxes are being lowered and production costs are falling, making the Lower 48 an irresistible temptation for Canadian drillers.

This seems like yet another sign that despite the legitimate environmental agenda of the federal authorities in Ottawa, demand for crude, or rather, demand for local crude, in Canada’s southern neighbor, is growing. Meanwhile, British Columbia’s outspokenly anti-oil government earlier this week found another way to delay Kinder Morgan’s Trans Mountain pipeline expansion.

The…

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