Oil & gas industry blues continue on

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FORT ST. JOHN, B.C. – 22 of the 24 parcels offered this week covering eleven thousand 451 hectares were sold in the August sale of BC Crown Petroleum and Natural Gas Rights.

So had it been eight years ago, when the price per hectare for drilling licenses and leases sold in the August sale was $4,359.19, it would have resulted in a bonus bids total of $49.9 million dollars.

However, this is not 2008, and the average price per hectare of Wednesday’s sale was only $77.89.

Thus the total tender bonus was $950,000 and the year-to-date total is roughly 3.9$ million less than 0.2% of the 2008 August sale, when 131, of 139 parcels sold, generated $502 million in bonus bids.

The 2016 seven month total is also less than one quarter of the 1982 full year bonus bids total of $16.7 million dollars, and that remains the lowest annual total on record at the Ministry of Natural Gas Development.

For the current calendar year it works out to a monthly average of about $577,000, or roughly 40 percent of that record low total post, 34 years ago.

The sale results come as no surprise to industry insiders including Mark Salkeld of the Calgary based Petroleum Services Association of Canada.

In the P-SAC third update to its 2016 drilling activity forecast late last month he said, times are still tough and drilling seasons as we have come to know them are pretty much non-existent.

He added there may be some activity, but nowhere near the industry levels experienced in 2013/14.

He also noted the number of petroleum service companies that have, or are in danger of, closing their doors forever, is growing, and thousands of workers have lost their jobs and are looking at every industry, and every opportunity to find work.

We note again he concluded, “The ongoing and frustrating lack of progress on gaining access to tidewater for our oil and gas industry is hindering Canada’s economic growth, costing the country of billions of dollars in lost revenue, and negatively affecting our ability to attract capital investment”.