With Canadian oil and gas production stranded due to a lack of market access, investment in Canada’s upstream industry has stagnated in 2018 after a major recovery in 2017.

As a result, domestic service and supply companies are looking to the rapidly growing U.S. and international markets for growth opportunities rather than competing for a bigger piece of a shrinking Canadian pie.

“Generally, we view Canada as a relatively stable market, where our fleet quality, our crew performance, our customer reputation and the scale we have provides a strong foundation for free cash flow,” Precision Drilling Corporation president and chief executive officer Kevin Neveu told analysts in his first quarter conference call. “We continue to invest to sustain this fleet, but we don't see a need for any growth investments in the near future.”

Meanwhile the Canadian driller continues to grow operations in the U.S.

Precision has seen its market share grow in the Permian Basin from around two per cent in 2010 to around eight per cent in 2017. In the Niobrara, it now has around 22 per cent of the market, compared to around one per cent in 2010.

Precision isn’t the only Canadian driller focused on U.S. growth, with competitors Ensign Energy Services Inc. and Trinidad Drilling Ltd., along with smaller contractors like Citadel Drilling Ltd. and Akita Drilling Ltd., moving assets south of the border. Peters & Co. Limited estimates at least 13 high performance rigs have moved to the U.S. so far in 2018, representing 10 per cent of the fleet for drilling deep, long lateral horizontal wells.

Pressure pumpers are also seeing U.S. growth. Calfrac Well Services Ltd. brought on its 16th fracturing fleet in the U.S. during first quarter and expected to add another before the end of the second quarter, its chief executive officer Fernando Aguilar said in announcing first quarter results.

The Calfrac chief executive said the fundamentals of the U.S. market are more positive than in Canada, with the rig count up nine per cent since the beginning of 2018, and the horizontal rig count up 12 per cent. There are industry estimates claiming around two million horsepower of pumping capacity will need to be added by year-end to bring the market back into balance, Aguilar said, before adding that doesn’t mean Calfrac will be building any new fracturing spreads anytime soon.

The company currently has around 80,000 horsepower of pumping capacity waiting to be reactivated in the U.S.

Aguilar said Calfrac believes demand for fracking spreads in the U.S. will remain above supply until late 2019 at the earliest.

“The need to refurbish fleets will last for years,” he said.

While larger Canadian service companies are already taking advantage of the growing U.S. market, there are opportunities for smaller companies as well, according to the just released 2018 Going Global: Helping Canadian companies navigate international opportunities report, the third in a series of reports produced by JWN identifying the most promising markets for Canadian oilfield service exports.

Sponsored by the Government of Alberta, the Petroleum Services Association of Canada (PSAC), Export Development Canada (EDC) and the Canadian Global Exploration Forum (CGEF), the 2018 Going Global report updates the opportunities and challenges for Canadian exporters in the 16 markets identified in the previous two Going Global reports, while providing deeper analysis of opportunities in the major U.S. shale plays.

The report shows that over 900,000 wells will be drilled in the seven major U.S. shale plays leading up to 2050, requiring an investment of a little over $5 trillion on drilling and completions alone. The Permian Basin in Texas will lead the charge, with an expected $1.3 trillion spent over the next 32 years drilling around 220,000 wells, but there are opportunities in all plays for Canadian operators with the right technologies or services.

In the shorter term, it finds that capital spending in U.S. unconventional resource plays will grow by 25 per cent per annum over the next three years as operators build out new production

The 2018 Going Global identifies the key opportunities and challenges of entering the U.S. market, along with providing advice from exporters who have successfully penetrated the market.

To download your 2018 Going Global Report, click here.