Thursday, March 27, 2014

Arrival Of Spring Season Signals North American Oil Boom

It’s no secret that when drilling for oil and natural gas in North America there are more obstacles to navigate than where to drill. Any drilling operation must cope with the winter weather and the varying challenges it delivers.

That is not even taking into account a winter like the North American continent has seen in 2014. One of the harshest and most brutal in 100 years. But everything that starts as a season eventually ends as a season — sometimes it just takes a little longer. And as far as oil drilling operation in Canda and the U.S. are concerned, this winter cannot end fast enough

Thawing ground and driveable roads providing access to sites and stationary equipment mean more activity on site, but also it means a spike in the employment numbers and the increase in active rigs.

The U.S. oil and gas drilling boom is creating jobs faster than the general economy and generating enough wealth to prevent a lapse back into recession, according to a report published by Manhattan Institute.

The overall U.S. employment level has not returned to its prerecession level, but the number of oil and gas jobs has grown 40% since the dark days of the economic spiral. For the states that have serious activity, approximately 10 that are considered in the epicenter of oil and gas growth, overall statewide employment gains have greatly outpaced the national average.

The U.S.’ record-setting shale oil and gas boom has been the nation’s biggest single creator of solid, middle-class jobs — throughout the economy, from construction trades to sector-specific services to information technology.

Overall, nearly 1 million Americans work directly in the oil and gas industry, and a total of 10 million jobs are associated with that industry. So, a seasonal shift to warmer climes makes the employment offices buzz and the economic numbers grow monthly.

In Canada it is a bit more challenging, as hard winter ground is inaccessible. The Canadian  ‘Spring Break Up’ cannot come fast enough for Canada and, based on historical patterns, it should start to be reflected in the coming rig counts and returning employment at those rigs.

On average, spring break-up takes about 500 rigs out of action in Canada for several months, as thaw-related road bans and load limits prohibit heavy vehicle transit. While the predictions for Q1 in 2014 were slightly below-predicted rates, the Q2 outlook is clearly going to be better as some access is available; however, late-June is the usual time when thawed ground becomes safe and accessible again.

The winter of 2014 will be remembered for a long time as the winter that never ended. While the U.S. can count of the availability of workable weather in some of its southern plays, the end of the winter and the employment increases and rig counts that go with it will be welcome sights to the U.S and Canadian economies.

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