Prairie farmers take financial hit as oil and gas slowdown stalls drilling rigs
Kevin Neveu, president and CEO of Calgary-based Precision Drilling says farmers' experience with mechanical equipment and troubleshooting make them a vital cog in the drilling business
CALGARY—For 56-year-old farmer Shannon Webb, waking up Friday to six inches of snow coating his grain fields near Wynyard, Sask., the frustration of an interrupted harvest wins out, for now, over worry about the ongoing oil-and-gas drilling downturn.
Like many Prairie farmers, Webb has used a steady paycheque from working on drilling rigs in winter and summer for decades to pay down his land and equipment debt and stabilize his farm income. He’s been able to leave the rig to tend his farm in spring and fall and go back to the oilpatch when dry weather or frozen ground allows drilling to ramp up again.
“I was supposed to go back (to the oilpatch) by Nov. 1 but I don’t think I’m going to get much more than about two weeks out of that job, anyway,” he said in disgust.
“I don’t think I’ll be done combining … I’m going to have to get this done.”
Webb has been working on rigs since 1978, about 38 years. He says the current downturn, marked by two years of depressed oil prices, is the worst he’s seen since the big oil price crash of the 1980s.
But on Friday, he’s most concerned about the 2,000 hectares of wheat _ more than half of the 3,500 he planted _ that is covered in a white mantle. If luck holds, he says, the snow will melt and the land dry out in time to get equipment back in the fields before the real winter sets in.
Farmer Keith McCarty, 52, would love to have a rig job to go to as he, too, deals with a harvest that’s not quite finished.
At a time when he should be transitioning from wheat fields to oilfields, he is stuck on the family farm near Webb, Sask., waiting for a call—the rig he manages in Alberta was shut down last Dec. 18 for the Christmas break and it hasn’t been contracted to work since.
“Being without work, yeah, it’s pretty stressful, pretty hard,” he said, noting he has two kids in college and another in high school. “You know the farm only gives you so much.”
Industry forecasts suggest that 2016 will be the worst year for drilling activity in almost four decades in Canada.
The Canadian Association of Oilwell Drilling Contractors estimates 3,600 wells will be completed this year, down 33 per cent from last year’s 5,300 and 68 per cent from 11,200 wells in 2014.
Each idle drilling rig represents about 25 field jobs, says Kevin Neveu, president and CEO of Calgary-based Precision Drilling.
He said only 42 of the company’s 142 Canadian drilling rigs are working these days and that’s unlikely to climb beyond 80 this winter, the peak drilling season in Western Canada.
Neveu said farmers are a vital cog in the drilling business for more than their complementary schedules.
“Most farmers have a lot of experience with mechanical equipment, with troubleshooting, with problem-solving, with resourcefulness and, generally, farmers like things to be done in a certain way, which fits the culture of the drilling rig very, very well,” he said.
Farmer Jason Hundt, 41, counts himself lucky after the rig he manages went back to work this week near Wabasca, 325 kilometres north of Edmonton. He figures he has worked only 45 days on a rig in the past year _ usually he gets in 200 days.
He farms with his twin brother, Jeff, and over the past two decades the industrious duo have used off-farm earnings to buy their mother’s farm near Medstead, Sask., and then continue to add land and equipment.
They’ve tried to avoid taking any personal income from the farm to maximize debt repayment but the slowdown in the oilpatch has put an end to that strategy.
“It definitely is a struggle and it sucks spending savings and going backwards,” Hundt said.
Webb, who now works for oil producer ConocoPhillips as a supervisor of the rigs it hires, says there are fewer farmers on rigs these days. He says farms are getting bigger and there aren’t as many young men who need or want jobs in the oilpatch.
Increased regulation means that there are more courses to take and more safety equipment to wear, he added.
“Hate to say this, but they’ve regulated it so much some of the guys just get sick of it,” he said.
McCarty said he’s seeing more city-raised employees on his rig, although not all of them are quite prepared for the hard work and tough conditions.
“They aren’t used to getting all bundled up and then getting soaking wet,” he says. “Half the time in the winter you’re like an icicle walking around. You’re warm inside but your outsides are frozen because you’ve been wet.”
Hundt says he thinks a lot of young farmers are either leaving farming for easier jobs in the city or have inherited a self-sustaining farm.
“I didn’t get a farm handed to me. I had to buy one,” he said.