By Amanda Stephenson
CALGARY (Reuters) – The oilfield drilling and services sector in Canada is beginning to feel the effects of potential tariffs threatened by U.S. President Donald Trump, sparking concerns that a projected industry recovery may be at risk. The Canadian drilling sector saw a decline in employment between 2014 and 2020 due to low oil prices and decreased production during the COVID-19 pandemic. Although there has been some improvement since 2020, the threat of a 10% tariff on the 4 million barrels per day (bpd) of Canadian crude imported into the U.S. could disrupt this progress, according to industry representatives.
When oil market volatility strikes, oilfield service companies are often the first to bear the brunt as oil producers look to postpone or cut back on spending. Precision Drilling, the largest drilling rig operator in Canada, experienced a notable slowdown in its Canadian well servicing segment in the fourth quarter of 2024, which CEO Kevin Neveu attributed to tariff uncertainty affecting customer decision-making.
A report by TD Cowen in February suggested that Canadian oil producers may adopt a cautious approach due to the tariff uncertainty, leading to a revised 2025 Canadian rig count forecast and downgraded recommendations for drilling stocks. Mark Scholz, president of the Canadian Association of Energy Contractors (CAOEC), expressed concerns about the potential negative impact of reduced investments on the industry.
While larger oil companies may not be immediately affected by a 10% tariff, smaller firms could face challenges, particularly with possible retaliatory tariffs from Canada. Gurpreet Lail, president of Enserva, highlighted the impact tariffs could have on job losses in an industry still in the process of recovery.
The outlook for the Canadian drilling sector, which had been optimistic for 2025, is now uncertain as the industry navigates the challenges posed by escalating trade tensions.
However, this does not bode well,” Amanda Stephenson reported. Liz Hampton and Marguerita Choy handled the editing for this piece.
