Canada

Grant Bates

Canada

canada@mrcglobalinsight.com

The energy market continues to be active in Western Canada with the ongoing development of the oil sands and the growth of shale gas and tight oil production capacity. Canadian drilling activity is forecasted to average 350 active rigs in 2014 (down 1%), with new wells drilled about 10,600 (up 1%) from 2013 levels. Regional year over year new wells drilled are projected as follows:

  • Alberta: down 6%
  • Saskatchewan: up 17%
  • British Columbia: up 20%
  • Manitoba: down 15%

The first half outlook for the Canadian marketplace is chiefly optimistic. However, the marketplace has presented marginal challenges, including the recent Port of Vancouver trucker strike and variable currency exchange processes. While other distributors continue the process of integrating businesses and systems, MRC Global offers customers stable, diverse product and service offerings.

MRC Global is anticipating a stable demand for core pipe, valve and fitting offerings, with general inventory levels remaining strong with adequate lead times and material availability. Throughout the Q2 2014, ongoing inventory optimization should deliver shorter lead times from manufacturers compared to 2013. MRC Global anticipates on-time delivery rates to remain stable throughout the year.

Many customers are focused on internal growth through CAPEX projects to further develop their current asset base versus the large scale acquisitions we have seen in previous years. The material requirements related to oil sands and thermal applications must be suited for higher pressures and temperatures in highly corrosive conditions. Lead times for specialty products (particularly valves) in these applications can be long and MRC Global is working with our key customers and vendors regarding forward stocking programs. Relatively stable price trends are being forecasted, with the potential for moderate increases in some specialty product lines in 2014. While large upward trends are not expected, some interest has surfaced towards manufacturer standardization in order to best leverage spend. In general, currency exchange may pose the largest pricing hurdles, with MRC Global taking an active approach to mitigate risk for future transactions.

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