PSAC revises 2017 drilling activity forecast in Canada

Petroleum Services Association of Canada (PSAC) has revised its forecast of the number of wells to be drilled in Canada this year to 6,680.

In its second update to the 2017 Canadian Drilling Activity Forecast, PSAC has scaled up the number, which represents an increase of 2,505 wells and a 60% increase from PSAC’s original 2017 Drilling Activity Forecast.

PSAC reported 4,175 wells rig in its initial drilling activity forecast that was released in early November 2016.

The trade association based its updated 2017 forecast on average natural gas prices of $3 per million cubic feet (AECO), crude oil prices of $52.50 per barrel (WTI) and the Canada-US exchange rate averaging $0.74.

PSAC president and CEO Mark Salkeld said: “Never under-estimate the tenacity or efficiency of the Canadian oilfield services sector.

“The drilling seasons of 2015 and 2016 were difficult to say the very least and the sector is still making adjustments to manage costs and meet growing expectations of their customers, but with some degree of confidence in $50 oil and the dramatic lowering of costs by the service sector, we are seeing increased activity levels.”

Salkeld also added: “The producers are recognising that the cost reductions delivered by the service sector over the last three years are not sustainable, especially now that there are indications of an uptick in industry.

“The leading-edge innovation, safety and efficiencies for drilling and completing oil and gas wells in Canada come from modern certified equipment and highly trained workers, which are difficult to deliver with razor thin margins.

“Rate increases for oilfield services are being realised slowly, which will help this sector get back to work delivering the best-in-class services our customers, the producers, need and rely on.”

At the provincial level, PSAC now estimates 3,320 wells to be drilled in Alberta, in comparison to 1,900 wells in the initial forecast.

Around 60% more wells are expected to be drilled in British Columbia, with PSAC’s revised forecast now touching 449 wells up from 280 in the initial forecast.

As per the revised forecast, 2,670 wells are expected to be drilled in Saskatchewan, compared to 1,940 wells in the initial forecast.

PSAC represents the service, supply and manufacturing sectors within the upstream petroleum industry.

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Image: An oil drilling rig. Photo: courtesy of rsvstks via Freeimages.com.