CH:Oil and gas service firms look to a winter boom
BY REBECCA PENTY, CALGARY HERALD; WITH FILES FROM REUTERS; PHOTOS, GAVIN YOUNG, CALGARY HERALD JUNE 7, 2011
Alberta oil and gas service firms are predicting a busy year set to match a rosy industry forecast out Tuesday for all of North America.
Companies displaying their heavy equipment at the Gas and Oil Expo and Conference in Calgary said it will be tough to meet demand from clients whose activities are ramping up.
"We've got some customers that I'll be hard-pressed to keep up to, for the winter," said Doug Sparrow, general manager of Xtreme Hot Oil and Pressure Services Inc., based in Hinton -about 300 kilometres west of Edmonton.
Sparrow was manning an outdoor booth at the first day of the exhibition, which runs until Thursday, that included a display of several of his company's equipment-laden trucks used for drilling and completions projects.
"We can't build enough equipment now," said Sparrow, who is hiring to double his workforce of 45 employees to match increased exploration and production activity.
Global spending on oil and gas exploration and production may grow 14 per cent in 2011, Dahlman Rose and Co. analyst James Crandell said Tuesday in a semi-annual forecast that predicted faster growth than an earlier report estimating 11 per cent growth this year.
The New York-based investment banker's analysis of a survey of 445 oil and gas companies noted exploration and production spending is expected to grow 22 per cent in the United States to $122 billion US and rise $42 billion in Canada this year.
At the exhibition, Sparrow credited large projects by Shell Canada, Tourmaline Oil Corp., Fairborne Energy Ltd., Devon Energy Corp. and other big players in Alberta and British Columbia for the growth in business for his company.
Across from Sparrow's display at Stampede Park, Calgary-based Rotating Right Inc. was also gearing up for solid business thanks to a trickle-down effect from the active exploration and production side of the sector. Vice-president of sales and marketing Mike Keeley for Rotating Right, which designs high pressure water injection pump packages for the downstream industry, said the firm has already seen more work since 2010.
"Year-over-year, we've increased our sales by about 15 per cent," Keeley said, crediting the relatively high price of oil with spurring more exploration and development that in turn increases investment in the downstream part of the business.
"We've seen a lot of projects that have come back online that we were bidding on a year-and-a-half ago that never made it (then)."
The Dahlman Rose and Co. report noted oil and gas companies surveyed assumed average U.S. prices of $87.31 per barrel of oil in 2011, up $10 from expectations in the last survey in December 2010. They assumed an average price of $4.53 per million cubic feet for natural gas.
"The results of our survey support our positive view toward investing in oil service stocks," Dahlman Rose said in a note announcing the results.
