(Canadian Press)

By rdnewsNOW staff

Drilling Forecast

Petroleum Services Association of Canada lowers 2019 drilling forecast

Aug 1, 2019 | 10:24 AM

A small drop is now forecasted in the number of wells to be drilled across Canada this year.

That according to the Petroleum Services Association of Canada (PSAC), which issued its third update to its 2019 Canadian Drilling Activity Forecast on Wednesday.

PSAC officials now forecast the number of wells to be drilled (rig released) across Canada to drop from 5,300 in its May 2019 revision, to 5,100 wells drilled in 2019.

PSAC based its updated 2019 Forecast on average natural gas prices of $1.60 CDN/Mcf (AECO), crude oil prices of US$57.00/barrel (WTI) and the Canada-US exchange rate averaging $0.76.

On a provincial basis for 2019, PSAC now projects 2,425 wells to be drilled in Alberta, down from 3,532 wells in the original Forecast.

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The revised forecast for Saskatchewan now sits at 2,035 wells compared to 2,422 wells in the original Forecast.

Manitoba is forecasted to see 230 wells or a decline of 25 in well count for 2019, while approximately three per cent more wells are expected to be drilled in B.C., with PSAC’s revised forecast now at 395 wells, up from 382 in the original forecast.

PSAC President and CEO Gary Mar says in a press release, “Compared to last year, the total number of wells expected to be drilled is lower by 31 per cent. These are levels not seen since the lows of 2015 and 2016 at the onset of the downturn.”

“It is clear that our industry continues to face challenges for a healthy recovery,” continues Mar. “News of the Trans Mountain Pipeline Expansion being approved for a second time following its purchase by the Government of Canada has not restored investor confidence in Canada.”

Mar says concerns remain that the Trans Mountain Pipeline Expansion will be built in a timely fashion to open market access beyond the US.

“With the passage of Bills C-69 and C-48 by the federal government, support for this industry at all in Canada is in question,” SAYS Mar. “For the first time in Canada, sovereign risk is an issue.”

“On the provincial front in Alberta, while optimism is evident with a new government in office, curtailment of oil production remains in place and continues to be a factor against new investment,” adds Mar. “Across both Alberta and B.C., gas production is also hampered by low prices, again from lack of market access beyond the US until LNG Canada is in service.”

Mar says the result of these challenges is that capital, companies, equipment and crews are leaving Canada for better opportunities, with the US an easy choice as it forges full-speed ahead with a supportive government and a welcoming and competitive business environment.

“Having only one customer for our oil and natural gas has not been a good strategy for Canada,” he exclaims. “Canadians are losing out on jobs and $15-25 billion per year in lost revenue that could be used for social programs such as health care, education and roads as well as for R&D and innovation.”