驰辞谤办迟辞苍听鈥� It鈥檚 hard to miss a drilling rig painted John Deere green.
If you opened up the National Post app on your smartphone in late September or early October, you might have seen a prominent story in the Financial Post section. It was a paid-for story, in other words, an advertisement, something the news business calls an 鈥渁dvertorial.鈥� In this case, the advertorial was paid for by the Saskatchewan Ministry of Economy as part of a series of advertorials promoting Saskatchewan (another piece focused on pipe-maker Evraz).
Posted on Sept. 25, the photo was very distinctive. There was Crescent Point Energy Corp. CEO Scott Saxberg in his red coveralls and white hardhat, with a very distinctive green and yellow drilling rig behind him 鈥� Crusader Drilling Rig 2.
Crusader Drilling Rig 2 has been one of Crescent Point鈥檚 regular rigs for a few years now, usually drilling within a few miles of Stoughton. So when it came time to do the photo shoot and filming for the Ministry鈥檚 ad campaign, it was a good fit.
Don Rae, president of Yorkton-based Crusader, spoke to Pipeline News on Oct. 8 about that and how things are going in the drilling business. Rae has recently been appointed to the board of directors for the Canadian Association of Oilwell Drilling Contractors, or CAODC, as the sole Saskatchewan rep on the drilling rig side.
Crusader has three drilling rigs. Rig 1 had been drilling in Manitoba, but has been racked since it drilled a few wells in August-September. Prior to that, its last well was November 2014.
Rig 2 has been relatively steady with Crescent Point, but it was also shut down briefly this fall when Crescent Point cut its drilling program from 17 rigs to one before resuming again a few weeks later.
Rig 3, since it was built, has worked in Alberta. It was most recently working in the area around Rocky Mountain House last winter and into February. 鈥淚t hasn鈥檛 turned a wheel since,鈥� Rae said.
鈥淎lberta鈥檚 grim, with the uncertainty in the political climate out there. It鈥檚 a scary scenario.鈥�
Alberta鈥檚 change of government has impacted them directly, Rae noted. 鈥淚 think it鈥檚 going to overall benefit Saskatchewan in the long run, but we鈥檙e not seeing that effect yet,鈥� he said.
Rae expects the first NDP provincial budget in Alberta, is promised to increase taxes on corporations and higher-income earners, will have an impact.
鈥淚鈥檓 happy to be from Saskatchewan, these days,鈥� he said.
Crusader is currently looking to bring Rig 3 to Saskatchewan, where its larger capacities may make it favourable for more demanding holes. 鈥淚 don鈥檛 like the climate out there, and the sooner I can get it out of there, the better,鈥� Rae said of Alberta. 鈥淲e鈥檒l see.鈥�
However, all told, all three rigs were idle in mid-October. 鈥淲e鈥檙e waiting to move after the long weekend,鈥� Rae said, of Rig 2. 鈥淚t鈥檚 definitely been a slow year. We鈥檝e been fortunate enough, for the most part, since road ban to have one rig running through till September. We鈥檝e been down with everything for a bit, but we鈥檙e hoping to close out the year with a few wells for Rig 1, and one for sure, maybe more for Rig 2.鈥�
Video shoot
Asked how a Crusader rig ended up in these government ads, Rae explained, 鈥淭hey did a big film clip on the oilpatch. They chose Crescent Point because of their big footprint in Saskatchewan, and various mining companies. They鈥檙e going to put this all together and use it for promoting investment in Saskatchewan worldwide.鈥�
鈥�(Crescent Point) picked one of their rigs, and it happened to be ours. So we were fortunate enough. They filmed for about six hours. Saxberg was there for an hour or more. It was win-win for us, because our rig is going to be shown all over the world. It鈥檚 free promo.
鈥淚t was quite interesting. They had drones out there, too. They had us tripping pipe in and out of the hole. We were waiting to tear down the rig. They had the drones up at monkeyboard level and all around the rig. I鈥檓 anxious to see the finished product.鈥�
The shoot took place in early September. Rae had an opportunity to talk with the Crescent Point CEO for about half an hour.
Turned the corner?
鈥淢y overall feeling (regarding) the patch in general is we鈥檝e turned the corner. There鈥檚 not going to be any skyrocketing price anytime soon; but I do believe we鈥檙e going to start edging up,鈥� Rae said.
He expects U.S. product to drop off like a stone, uncertainty about Russia鈥檚 involvement in Syria and OPEC is realizing they can鈥檛 make money.
鈥淚 don鈥檛 think a lot of companies are drilling enough lately to keep production at what it was.鈥�
Asked what he will be taking to the CAODC as a board member now and what the state of the industry is, Rae responded, 鈥淭here鈥檚 a couple factors. Utilization is way down, and day rates are way down. I don鈥檛 care how you cut the mustard, you can鈥檛 run any leaner than we are. If these day rates stay where they are, if you have any debt at all, you鈥檙e maybe breaking even, but probably not. It鈥檚 a case of you鈥檝e got to really tighten your belt and toughen it up and get through it.
鈥淲e鈥檒l get through it. We鈥檙e okay, but depending on your debt ratio, anyone carrying much debt, they鈥檙e in trouble.鈥�
Will all the smaller drillers in Saskatchewan be able to survive this downturn?
鈥淪ome will, I think, depending on what the rates are. If you鈥檙e running at a loss, you can only absorb that so long, too. There comes a time where you鈥檙e better off having your rig sitting than wearing it out. I believe it鈥檚 going to turn the corner gradually. I can see us up to $60 by spring, maybe. We get up to $55, $65 dollars, and look at the discount on all the services, there鈥檚 a case to be made for these companies to do some drilling.鈥�
It鈥檒l be interesting to see what the feeling is among the board of CAODC he said, with his first meeting coming up in mid-October.
鈥淚鈥檓 hoping I can bring the voice of all our small producers to the table.鈥�
With less than half of the usual number of drilling rigs working, where have all the employees gone? Rae responded, 鈥淓very well creates 100 to 150, probably more, direct and indirect jobs.鈥�
鈥淎 lot of them have gone to various jobs, i.e. construction, mines, the upgrader, wherever they can find work. There will be a lot of them that a guy won鈥檛 get back. It鈥檚 not that uncommon in a cycle. We鈥檝e tried to keep most of our senior guys around in one form or another, whether they鈥檙e working motors or whatever they鈥檙e doing.鈥�
鈥淚t鈥檚 been working well for us. We鈥檝e told our guys if you鈥檙e roughnecking, you鈥檝e got to pull your share.鈥�
It can happen where everyone thinks they鈥檙e still the driller, even if they鈥檙e working motors, but that hasn鈥檛 been an issue for Crusader.
鈥淚t鈥檚 tough. What鈥檚 really going to be the Achilles鈥� heel is that if this patch does turnaround fairly quickly, all of a sudden everyone starts ramping up, there鈥檚 not going to be any people for any of the various services, including rigs. There鈥檚 going to be a huge shortage.
鈥淎 lot of young ones have never been through a downturn, and now they鈥檝e got a taste of it. A lot of them are going to have a sour taste in their mouth, and what do you do? It鈥檚 going to be hard to get back to where we were when everybody was steady. It鈥檚 going to be very, very difficult. It鈥檚 going to take a while. You鈥檙e going to be attracting new, green people. It鈥檚 going to be a re-training program.
鈥淭hat鈥檚 probably going to be the toughest thing of all. Your iron will be there, but the rest is not going to be pretty,鈥� Rae said.
If a drilling company does have a couple wells come up, workers may be reluctant to give up lower-paying, but steady, jobs to come drill a couple wells and then be laid off again, he noted.
Resum茅s are coming from everywhere, but Rae said, 鈥淲e鈥檙e going to look after the guys who have been with us. We鈥檙e not hiring anybody new. We鈥檙e trying to keep our drillers and rig managers from all three rigs going. It鈥檚 pretty much what you have to do. I鈥檓 loyal to my people, and hopefully they鈥檙e loyal back.
鈥淚f you鈥檝e got your core, your drillers and some of your derrickhands, you can crew up fairly quickly. But holy moley, your frackers, directional drillers, they鈥檒l be screaming for everybody.
鈥淚t鈥檚 going to be scary when it starts to fire up, I can tell you that,鈥� he said.
On the positive side, Saskatchewan鈥檚 political climate and diversity of its economy work in our favour, he noted. 聽
