Alberta's drillers refute royalty review panel recommendations



    CALGARY, Sept. 28 /CNW/ - Drilling contractors and rig crews have a huge
stake in the current review of Alberta's royalty system. CAODC advised
Alberta's royalty review panel that during 2006, 373 drilling rigs worked on
average in Alberta, employing an average of 9,400 rig workers.
    By the time CAODC saw Mr. Hunter on May 22, 2007, there were just 61 rigs
running in all of Alberta - 1,525 people employed, an employment decrease of
84%. During the same month in 2006, there had been three times as many rigs
running.
    Over 70% of drilling activity in Alberta is related to natural gas, not
oil, targets. When natural gas prices are low, as they have been for many
months, our clients drill fewer wells. This low price, $5.07 per MCF as of
yesterday, is compounded by the loss of almost $3.00 per MCF from the rising
Canadian dollar. Drilling activity in Alberta in 2007 is down by 35% as of
September 18, 2007 compared to the previous year.
    Drilling employment was as high as 13,000 during the busy winter months,
employing Albertans across the province. In February 2006, 5,000 Albertans
were working on rigs between Red Deer, Rocky Mountain House, Drayton Valley,
up to the Berland River. Another 3,500 were on rigs in the Grande Prairie,
Peace River, Red Earth, Zama City, and Rainbow Lake country. Almost 2,000 were
drilling from Pincher Creek through Lethbridge, Drumheller, Wainwright,
Provost, to Lac La Biche. 1,400 were working the rigs in the Fort McMurray
region, and another 300 worked near Turner Valley, Millarville, and the
southern Rocky Mountains.
    Alberta has a significant resource in unconventional natural gas - that
is the gas trapped in tight sands and coalbed methane. No one is drilling this
gas today because, even before the proposed royalty increase, it is uneconomic
at today's natural gas prices.
    Drilling is an industry where young people, particularly from rural
Alberta, find ready employment. They raise their families in our towns, and
they shop at the grocery stores, hardware shops, and car dealerships in these
towns. The Canadian Energy Research Institute (CERI) estimates that on
average, every drilling rig running in Alberta directly and indirectly employs
135 people. In 2006, that was an average of 50,000 people. As we approach fall
this year, 22,000 of these people are not working in Alberta's drilling
industry.
    Last year, rig managers were making an average of $160,000. Drillers
often made well in excess of $100,000. Workers make between $24.50 per hour
(roughneck) and $37.25 per hour (driller), supplemented by up to $2.00 per
hour for fully qualified rig technicians, in addition to the $150.00 per day
they are paid to help defray their living costs.
    These are excellent, high paying jobs. We are losing them.
    The royalty review panel is wrong to believe that there is a surplus
$1 billion that can be taken out of the natural gas business in Alberta. Their
naiveté will undermine the confidence of energy investors in Alberta's natural
gas industry.
    With activity already down by some 35% this year, what will the investor
uncertainty created by the panel's recommendations do to the drilling
industry?
    If MLAs in Alberta take the advice of the royalty review panel, our
workers, their families, and communities lose the best jobs they will ever
have.

    The Canadian Association of Oilwell Drilling Contractors (CAODC) is a
trade association that represents the contract drilling and service rig
industry across Canada. The membership in the Association is comprised of
49 drilling contractors, 5 Atlantic Division offshore contractors, 78 service
rig contractors and 144 associate members.





For further information:

For further information: Don Herring, President, Canadian Association of
Oilwell Drilling Contractors, Phone: (403) 264-4311

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CANADIAN ASSOCIATION OF OILWELL DRILLING CONTRACTORS

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