From a guy named 'Stan'

Just thought I would post a few of my observations for you guys while I was at it. I work in the oil industry as a contractor, mainly working in the field in northern BC, northern AB and rarely the NWT. There are a lot of guys like me who work a potion of the year in the field, usually in 2-4 week bursts and then spend the rest of the time at home in the lower mainland. I have been doing this for more than 10 years and have seen my fair share of boom and bust.
Currently we are heading for a bust. What many people are not aware of is that western canada is mainly a natural gas play with good pockets of heavier oil. Lots of the oil drilling in the last 2 years has been heavy (api <15) oil, such as in the peace river and wabasca areas. These wells were economic when oil was above $40 or so. However due to the labour squeeze, a lot of contractors and suppliers have ramped up their costs dramatically. Daily costs on a large rig are up to $85-100k from $65-75k a couple of years ago. In light of this many of the heavier oil plays are now marginal and investment is slowing. Meanwhile the price of natural gas has softened dramatically from $12 2 years ago whilst the operators have suffered the same cost increases. I have noticed over the last 3 months that some of the bigger nat. gas operators have colluded to try and starve some of the worst offenders in jacking up their rates. Devon, CNRL and Encana have slashed their drilling budgets and are releasing up to 50 rigs between them that were previously contracted long term. Presumably these rigs will be picked up by other operators, but this is feeling like a real slowdown to me. This has reduced the rig count of each operator by half. Bear in mind that the short term rush of jan and feb last year when every available rusting hulk was pressed into service the record rig count was around 860, (summers are 400-550), so you can see that a drop of 60 rigs on year round contract is significant. So far you will read none of this in the press, but it is certainly starting to be whispered in hushed tones around water coolers all over alberta. Many of the guys I work with have never experienced a slow down and will not even entertain the idea that it is possible. A lot of them earn huge money, but are real consumers and still manage to spend it well in advance. One guy I know earns approx $275k a year (you really have to sell your soul and work 280 days a year), but has monthly outgoings of $10k (house, f350, navigator for her, atv, quad, 12k plasma etc) why a guy like this needs to get a plasma on credit is beyond me but it is the pervading attitude of the industry. I realise that this is a dramatic example but it best highlights the attitudes of people in this industry.

http://www.caodc.ca/rigcounts.htm#biwkserv
Plots rig count for last 8 years or so. Note that it plots rigs up and down, so total is #rigs available for service.