Varcoe: As Canada spins its wheels, U.S. has pedal to the metal

Varcoe: As Canada spins its wheels, U.S. has pedal to the metal
To understand the state of the Canadian and U.S energy sectors these days, the drilling industry is a good place to begin the examination.

When you look at the number of rigs working in 2019 compared with the heyday of 2014 — before oil prices crashed — fewer than half the amount were active in Canada in January, says Mark Scholz, president of the Canadian Association of Oilwell Drilling Contractors.

South of the border, in the Marcellus shale play in the U.S. northeast, those same activity levels recovered to 75 per cent of where they stood five years ago.

In the Permian oil basin in west Texas and New Mexico, the number was even higher.

“The Permian Basin in Texas has recovered nearly 95 per cent of its activity levels from 2014. Alberta has recovered 42 per cent,” Scholz said at an energy conference this week.

“What that is telling you, and telling many people, is policy matters. This is not a commodity (price) issue.”

If the plight of drillers doesn’t capture the attention of federal policy-makers, they should read the latest report by the Paris-based International Energy Agency (IEA) on global oil markets.

The differences between Canada and the United States are glaring.

One country is booming, with production soaring and pipelines under construction. The other is facing low growth for the next five years.

“What the IEA is saying is a pretty heavy message. It means the U.S. is really focused on what their best interests are — and they will keep the pedal to the metal,” said Chris Bloomer, CEO of the Canadian Energy Pipeline Association.

“We are exactly the opposite.”

According to the IEA, total liquids production in the United States jumped by an astounding 2.2 million barrels per day (bpd) last year.

By 2024, U.S. producers will crank up output by another four million bpd, making up 70 per cent of all global production growth.

Across the world, upstream oil and gas investment jumped by six per cent last year and is slated to increase by four per cent in 2019.
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