Thu. Feb 29th, 2024

2024&nbsp ;under the sign of optimism for energy services companies

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Drilling will increase in 2024, according to the association that represents energy services companies.


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The association of energy service companies, Enserva, no longer reports cautious optimism, but just plain optimism when planning for next year. She expects a surge in activity for her members.

Oil prices are fluctuating at the moment, but drilling is increasing, investment returns to the sector and infrastructure projects are completed. All this causes a lot of optimism, explains Enserva president Gurpreet Lail.

About 6,300 wells will be drilled in Canada in 2024, according to Enserva's State of the Industry report. This corresponds to a 7% increase in drilling.

The signing of an agreement between British Columbia and the Blueberry River First Nation on the management of natural resources has enabled a strong resumption of activities in the province. After this summer's wildfires, drilling also increased in Alberta and growth is expected to continue into 2024, according to Enserva.

The association says there is also good news from the oil sands.

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Gurpreet Lail specifies that the record profits of oil producers had little benefit to service companies, since these profits were mainly devoted to debt repayment and shareholders.

The president of Enserva senses a change in trend today. The report prepared by the firm Garrison Strategy shows an increase in infrastructure spending of approximately 15% in 2023, and 10% in 2024.

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Enserva expects solid oil and gas demand through 2050 despite the contrary forecast of the International Energy Agency.

The oil company Cenovus plans to spend $500 million more next year, in particular to increase production at its oil sands sites. Its competitor, Canadian Natural Resources, also plans production increases in 2024 and 2025.

Infrastructure spending will increase for a third year. This allows us to affirm that the revitalization of the sector is sustainable, underlines the chief economist of the ATB Financial bank, Rob Roach.

The economist adds that the oil and gas sector will allow Alberta to fare better than other provinces in 2024. ATB forecasts 2.1% growth in the provincial economy in 2024.

We are not going to have an economic boom like in the past, but a good burst of energy.

A quote from Rob Roach, chief economist, ATB Financial

Describing himself as the curmudgeon amid these optimistic forecasts, Rob Roach discusses many risk factors.

The wars in Ukraine and the Middle East as well as the decisions of members of the Organization of the Petroleum Exporting Countries could change barrel prices very quickly.

Rob Roach believes that between inflation, high interest rates and weaker-than-expected Chinese demand, a global economic recession is possible.

Enserva also mentions government policies as a factor of uncertainty. Ottawa announced stricter rules on methane emissions and a cap on greenhouse gas emissions from the sector.

This is a huge risk for us.

A quote from Gurpreet Lail, President, Enserva

The labor shortage also continues to hamper the industry's growth, as explains Gurpreet Lail. Enserva estimates that 5,500 jobs could be created in the sector in 2024.

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