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Oil-patch spending cuts that have escalated well into the billions of dollars represent money that won't go to those that do all the dirty work in the field.

The drillers and oil-field service providers involved in fracking, maintaining old wells and hauling gear around are at the thin edge of the wedge in the oil-price collapse. Look for companies in that sector to make large cuts to their work forces in the coming months.

On Tuesday, Suncor Energy Inc. slashed $1-billion from its 2015 budget, with oil sands and East Coast projects getting deferred and 1,000 jobs eliminated. That was a day after Canadian Natural Resources Ltd. lopped $2.4-billion from its previously announced 2015 plan, the largest budget cut to date.

They won't be the last to revise downward, as oil prices loiter below the $50 (U.S.) a barrel mark seen as break even for much of Canada's crude production. The producers are ratcheting spending downward to match falling expectations for cash flow as oil and gas prices slump, and that hits the service sector dead on.

This week, Peters & Co. Ltd. said it expects the Canadian industry to generate $45-billion in cash flow, a drop of 40 per cent from 2014 and below the amount in the financial crisis days of 2009.

Those are ugly numbers for the more than 94,000 people who the Petroleum Human Resources Council has estimated work in oil and gas services, some of whom are now in danger of having more spare time.

Peters predicts activity in winter 2015 to get under way at a slower clip and to wind down even before melting conditions force road bans and the normal spring slowdown. The report predicts activity in 2015 will fall by almost a third from last year, and that just 30 per cent of the rig fleet will be operating on average.

Last week, 53 per cent of available rigs were operating in Canada, according to the Canadian Association of Oilwell Drilling Contractors, compared with 69 per cent a year earlier.

Investors have been anything but sentimental about the sector. Check out the share performance since early June, the last time oil was in the neighbourhood of $100 a barrel: Precision Drilling Corp. is down 61 per cent, Ensign Energy Services Inc. is down 44 per cent, Calfrac Energy Services Ltd. is down 57 per cent and PHX Energy Services Corp. is down 66 per cent.

Of course, Calgary's grizzled energy veterans say the industry has weathered numerous price slumps before, and they're right. The last one was just six years ago. This one bites particularly hard, though, as it came so quickly on the heels of a good year overall and is not tied to some other major global economic event such as the credit crunch.

Instead, it's an oversupply of hydrocarbons and there's no overriding push among members of the Organization of the Petroleum Exporting Countries or any other producing countries to take volumes off the market.

The drop in producer cash flow could actually be in the 40 per cent to 50 per cent range, said Kevin Lo, energy service analyst at FirstEnergy Capital Corp. He expects to publish his next outlook for the sector, taking in lower commodity price assumptions, later this week, marking the forth time he's re-run the numbers in the past three months.

The impact on employment is expected to be swift and severe, assuming crude remains in the doldrums.

"Every service executive I've talked to so far is either contemplating job reductions or wage rollbacks, so it's going to happen," Mr. Lo said. Expect rounds of cuts to get under way between February and April, he said.

Some of those from other parts of the country who have been working in western Canada will go home. Others will leave the business to work in a field with less volatility.

A few of the producers, if they have deep pockets, will use the downturn to their advantage as contractors clamour for their business. Seven Generations Energy Ltd., for instance, said it will maintain its $1.6-billion budget, at least for now, betting on a drop in rates.

The company is in the minority, however. There's going to be a lot less dirty work for a while, done by fewer people.

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