Service firms to lead Canadian economy

Gary Park, Petroleum News Calgary correspondent

Higher energy prices and the demand for natural gas in North America will see the oilfield services sector set the economic pace in Canada over the next two years, Bank of Montreal analysts predict.

Following the downturn in U.S. and Canadian drilling in 2002, companies will be scrambling to find new reserves of gas, which should boost their growth by an average 11.4 percent a year, the bank said.

“Although producers are beginning to accelerate drilling, the lag in getting new gas to market, combined with increasing demand for industrial use and power generation, suggests a tough struggle to rebuild inventories to adequate levels prior to the winter of 2003-04,” the study said.

In addition, the “fairly fast pace of development” in the oil sands sector should also benefit services companies.

But the E&P companies are expected to grow by a meager 1.8 percent annually in 2003 and 2004 because of supply shortages, the bank said.