CALGARY, A.B. — Yet another sign this week that the downturn in the oil patch is not about to be reversed anytime soon.
The Calgary-based Petroleum Services Association of Canada has issued the first drilling activity update since what it forecast late last year for 2016.
The Nov. 3 forecast projected 5,150 wells to be drilled in Canada this year, but it’s now calling for about a five per cent decrease of 250 wells.
It is basing the update on average natural gas prices of $2.50 Canadian per million cubic feet, crude oil prices of $38 a barrel U.S., and a Canada/U.S. exchange rate averaging 72 cents U.S.
All those numbers are also down from the November forecast, but it’s also worth noting the numbers in the latest forecast are higher than what the commodity markets were showing at the time of the news release yesterday morning, when the price of natural gas was only $2.20, the price of crude oil was only $31.77, and the Canadian dollar was trading at only 70.92 cents.
On a provincial basis, P-SAC now estimates about 330 wells to be drilled in B.C. this year — down 14, or about a four per cent drop from 344 in its’ original forecast.
In Alberta, the drop is estimated at 15 wells, to 2,718, down from 2,733, but in that province, it’s less than a one per cent drop from the November forecast — and the smallest among the four western provinces.
In Saskatchewan, an eight per cent drop, has resulted in a revised forecast of 1,643 wells from 1,789. The new Manitoba forecast is for only 205 wells, down more than 25 per cent, from the November prediction of 280.
P-SAC President and CEO Mark Salkeld says “I’m afraid were not out of the woods yet, and we’re still getting in the way of our own success,” but he adds, “We’re resilient and extremely good at what we do, and we’ll come out of this slump.”