Thank you.
Packers Plus Energy Services is an excellent case study on innovation and success originating in the Canadian oil patch. I'm honoured to have been afforded the opportunity to participate in today's panel discussion on the impact of the decline of global oil prices on the energy sector and the Canadian economy.
Our company was founded in Calgary at the turn of the millennium by three partners. They developed a system that allowed for the efficient extraction of hydrocarbons from tight formations through hydraulic fracturing. Its introduction was a catalyst for radical change in the industry as it combined with advances in horizontal drilling such that North American hydrocarbon production has grown considerably faster than North American demand. The consequences of this are not unrelated to why we are convening today.
Today Packers Plus has almost 1,000 employees with 32 locations around the world. Our company designs, manufactures, sells, and installs the highest-quality completion systems in the industry. We've now become the fourth largest completion company in the world after behemoths such as Schlumberger, the new Haliburton-Baker Hughes merged company, and Weatherford.
Ours is an example of how Canadian innovation and oil field expertise is sought and exported around the world.
If we discuss impact on prices, first I would like to point out that the members should consider that a barrel of oil is not necessarily homogeneous. There are varying crude qualities coming from different locations to a number of destinations. Canadians will be most impacted by the price of West Texas Intermediate and the Western Canadian Select blends.
Standard pricing is in U.S. dollars and it facilitates easier comparison and international trade. This means there is an inverse correlation between oil prices, particularly WTI, and the U.S. dollar. The current strength in the U.S. dollar is one aspect hampering a recovery in oil prices. Note that many OPEC and other oil-exporting nations have increased demand for U.S. dollars because they need to fund their budget shortfalls with their sovereign wealth funds and foreign currency holdings, and by holding U.S. dollars it protects them against currency losses.
Of course, Canadian producers have benefited by that in that the Canadian exchange rate has dropped from about $1.07 per U.S. dollar to close to $1.21 today.
Brent crude is the international blend and it's what sales are frequently based on. Over the last 25 years West Texas Intermediate has averaged a slight premium of about 2.6% over Brent, but since 2009 and the introduction of new hydraulic fracturing technologies, WTI has traded primarily at a discount. The discount has been relatively volatile but has more recently averaged over 20%. This premium represents lost opportunity for the Canadian economy and should be part of recognizing the motivation to increase our market access to tidewater so that we can sell into that market.
Despite the contention of my colleagues on the previous panel, oil is not necessarily the global commodity it's made out to be. The United States right now has a law banning export, so we have a North American market. Shale oil in the U.S. has increased production by four million barrels a day at a time U.S. demand has fallen from a 2006 peak of 22 million barrels a day to about 19 million barrels a day today.
With respect to the reduction in E and P capital expenditures and reduced oil field activities that was talked about, we are seeing sharp drops in North American rig counts. According to the CAODC website, each rig represents about 20 direct jobs and 135 indirect jobs. The rig count has dropped from over 1,800 in November to about 1,500 now, and it is expected to bottom later this year at perhaps as low as 1,250. A price recovery above $70 U.S. for West Texas would provide the signal to start adding rigs and subsequently increase production.
In the service industry that we are part of we've seen the reduced capex budgets and drilling activity felt across our industry. Competitors such as TriCan have experienced layoffs and have asked their staff to take pay cuts. Operators have been asking for and receiving price cuts but there are limits to how much of the price burden the service industry can or is willing to take.
This new reality will renew focus on efficiencies and provide incentives for companies to adopt more innovative approaches. A $90 West Texas Intermediate environment produced a pattern of drill, complete, put on production, and repeat among many shale operators. They became so busy ramping up their production they really didn't focus on efficiencies. This reduced activity level has now given them an opportunity to pause and review data.
Subsequently, we at Packers Plus expect first to see a lot of high-quality research papers produced, and then to gain some significant market share for us.
I am based in Houston, Texas, after 16 years in Calgary. Half of our business comes from Canada. We are looking to grow significantly in the United States. Open hole completions are the dominant completion method for unconventional ex-oil sands in Canada but in the U.S. it's cemented liner plug-and-perf.