Oil and gas drilling projected to reach 10-year high, but Trump tariffs pose threat

Author of the article:

The Canadian Press

Amanda Stephenson

Published Nov 29, 2024  •  3 infinitesimal read

The Northern Lights, aurora borealis, marque an quality implicit pumpjacks arsenic they gully retired lipid and state from good heads adjacent Cremona, Alta., Thursday, Oct. 10, 2024. Photo by Jeff McIntosh /THE CANADIAN PRESS

CALGARY — Canada’s lipid and state good drilling assemblage is poised to employment much radical adjacent twelvemonth than it has successful a decade, but the occupation maturation could beryllium derailed if president-elect Donald Trump makes bully connected his tariffs threat.

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The Canadian Association of Energy Contractors (CAOEC) — which represents drilling and work rig companies crossed Western Canada, arsenic good arsenic offshore drilling rigs successful Atlantic Canada — connected Friday said Trump’s caller menace of 25-per-cent tariffs crossed the committee connected goods coming into the U.S. from Canada and Mexico should beryllium taken “very seriously.”

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CAOEC president and CEO Mark Scholz said portion his enactment hasn’t formally crunched the numbers, punitive tariffs would beryllium a stroke to the sector.

“I deliberation what we bash cognize is that determination would beryllium immoderate interaction connected jobs,” Scholz told reporters astatine an lawsuit successful Calgary.

“So let’s acceptable authorities aside, let’s get to enactment due to the fact that we person a superior contented astatine hand.”

Trump’s threatened tariffs travel astatine a clip erstwhile Canada’s vigor assemblage is experiencing growth.

CAOEC expects a full of 6,604 wells to beryllium drilled successful Western Canada successful 2025. That represents a 7.3 per cent summation from 2024 and would beryllium the astir enactment successful the Western Canadian oilpatch since the commodity terms clang of 2014/15, which led to years of manufacture contraction.

The enactment besides expects the fig of jobs successful the assemblage to turn by 7 per cent twelvemonth implicit twelvemonth successful 2025, to 41,800.

“These correspond mortgage-paying, blue-collar jobs for Canadians that volition assistance physique beardown communities,” Scholz said.

Driving the anticipated uptick successful drilling enactment is the Trans Mountain pipeline expansion, which opened earlier this twelvemonth and has fixed Canadian lipid companies accrued export capacity.

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Natural state drilling is besides expected to emergence owed to the pending startup of LNG Canada, the country’s archetypal large liquefied earthy state export facility.

Energy products correspond Canada’s apical export to the United States. According to Statistics Canada, 81 per cent of Canada’s full crude lipid accumulation successful 2023 was exported, and astir each of that measurement (97 per cent) went to the U.S.

In the days and weeks pursuing Trump’s predetermination victory, astir experts believed lipid and state would beryllium exempt from immoderate tariffs the caller U.S. medication mightiness suggest — mostly due to the fact that the 2 countries’ vigor markets are truthful integrated that imposing tariffs connected Canadian lipid would thrust up vigor prices for U.S. consumers.

But Trump’s menace this week of across-the-board tariffs connected each goods has made Canada’s vigor assemblage jittery.

“What’s important to pass is there’ll beryllium an interaction connected the terms of vigor for Americans,” Scholz said.

“This is an country wherever I deliberation Canada needs to stock that information, to scope retired to our colleagues and our friends and neighbours successful the United States truthful that they recognize however mutually beneficial commercialized is — peculiarly erstwhile it comes to energy.”

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The CAOEC besides called Friday for the national authorities to wantonness circumstantial policies the lipid and state assemblage believes volition enactment Canada’s vigor assemblage astatine a disadvantage to its U.S. contention nether a Trump administration.

These policies see the projected national headdress connected greenhouse state emissions from the lipid and state sector, arsenic good arsenic the national interaction appraisal enactment and caller anti-greenwashing legislation.

Relations betwixt Canada’s vigor assemblage and the national authorities person been rocky successful caller years, with the manufacture accusing the authorities of imposing a de facto accumulation headdress by mounting what companies accidental are unrealistic and unachievable clime targets.

But Scholz said erstwhile it comes to Trump’s tariffs threat, the manufacture and each levels of authorities indispensable contiguous a agreed front.

“The Prime Minister has called for a Team Canada attack connected this, and we are each in,” helium said.

“So we’re going to enactment the Prime Minister, we’re going to enactment the premiers … it’s important that we get this right.”

This study by The Canadian Press was archetypal published Nov. 29, 2024.

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