Drilling activity in Canada has already seen a dramatic rise. A new project in B.C. will push it even higher

Canada's largestdrillingrigcontractorsays it will be closely watching thestartupof this country's first liquefied natural gas export facility after being caught off guard by the dramatic increase indrillingfollowing the opening of the Trans Mountain pipeline expansion.

PrecisionDrillingCorp.often serves as a barometer for the overall health of the country's energy sector due to its position as a market leader in providing equipment and expertise to companies in the country's oilfield.

But CEO Kevin Neveu said evenPrecisionitself was surprised by what he called the "near instantaneous" uptick indrillingin WesternCanadathat took place following the opening six months ago of the Trans Mountain oil pipeline expansion.

"We were surprised by how quickly customers responded to [new export]capacitywiththe Trans Mountain pipeline. I'd say thedemand [for Precision'sdrillingrigs]was 10 to 15 per cent higher than we expected resulting from that pipeline expansion," Neveu said on a conference call Wednesday to discuss the company's third-quarter financial results.

"So we're watching anxiously to see howLNGCanadafires up."

WATCH | Concerns over increased spill risk as new projects come online:

B.C.calls on Ottawa to update oil spill response as pipeline tanker traffic increases

2 months ago

Duration 2:20

The B.C. government wants Ottawa to update its emergency response plans in the event of a catastrophic oil spill. The call comes as oil tanker traffic in Burrard Inlet has increased substantially. As Jon Hernandez explains, oil exports are surging in the wake of the Trans Mountain Pipeline expansion.

Operations set to start mid-2025

The massiveLNGCanadafacility nearing completion near Kitimat, B.C., is expected to start operations by mid-2025. Industry insiders hope the facility which will allow Canadian liquefied natural gas to be shipped to Asian markets for the first time will provide the same boost to natural gas drillers in Alberta and B.C. that the Trans Mountain pipeline expansion gave to oil drillers.

By opening up additional export capacity for Canadian crude, the Trans Mountain pipeline expansion has served to boost prices for Canadian heavy oil. Neveu said as a result,demandfor Precision's rigs in this country is at "historic highs."

"Today we have 75 rigs operating inCanadaand we expect this pace to continue," he said, adding in the third quarter, Precision's customers'drillingactivity inCanadaincreased 25 per cent year-over-year, averaging 72 activedrillingrigs.

Neveu said the uptick indemandis coming both from customersdrillingheavy oil as well as thosedrillingnatural gas condensate, which is added by producers to heavy oil to make it less viscous and easier to transport.

He said any additionaldrillingactivity spurred by thestart-upofLNGCanadawill take place in the Montney natural gas-producing region of northwest Alberta and northeast B.C.

"It feels like [we could see]demandin that two-to-fiverigrange to balance out thedemandfromLNGCanada," he said.

Crew shortages a possibility

All of the newdemandmeans that Neveuexpectsto see Western Canada's winterdrillingseason ramp up quickly this year,withpeak seasonaldrillingactivity likely exceeding last year's.

He also said industry-widedrillingrigservice crew shortages could be a possibility this winter.

PrecisionDrillingCorp. said Tuesday after the close of markets that it earned $39 million in the third quarter of 2024, nearly double what it earned in the same period last year.

It said the profit works out to $2.77 per share, compared to the $20 million profit, or $1.45 per share, it earned in the third quarter of 2023.

The company's revenue was $477 million, up from $447 million in the prior year's quarter, as the increaseddrillingactivity inCanadaand internationally more than offset lower activity in the U.S.