CALGARY, A.B. – The Petroleum Services Association of Canada has revised its 2018 Canadian Drilling Activity Forecast, saying that lower natural gas prices will see slightly decreased activity.
PSAC lowered its estimate for the number of wells that will be drilled in Canada by 300 to a total of 7,600 wells. This represents a decrease of four percent from PSAC’s original 2018 drilling forecast released last October.
PSAC is basing its updated 2018 forecast on an average price for natural gas at $1.75/million cubic feet, a crude oil price of $55.00 USD/barrel, and the Canada-US exchange rate averaging $0.79.
On a provincial basis, PSAC now estimates that the number of weeks that will be drilled in B.C. is 517, from an initial forecast of 730. That’s a decrease of almost 30 percent. 3,807 wells are forecast to be drilled in Alberta, down from 3,998. The revised forecast for Saskatchewan now sits at 2,998 wells compared to 2,931 wells in the original forecast, and Manitoba is forecasted to see 265 wells, an increase of 35.
“Even with steady and stable increases in industry activity levels over the low points in 2015 and 2016, any improvements will continue to fluctuate due to the ongoing discount Canada realizes for its oil and gas versus world prices.,” said PSAC President and CEO of Mark Salkeld. “As long as our products are essentially landlocked and restricted to just one customer, a full recovery of activity levels for the Canadian oil and gas industry will be negatively impacted. Investment dollars are fleeing Canada for regions of the world offering a more competitive environment for investment and where there is greater confidence in getting projects approved and completed.”
Salkeld also indicates that “the same challenges remain with respect to prolonged downturns in trying to attract the necessary skilled labour force back to the oilfield services sector. As the sector has experienced in the past, it takes many years to recover from significant downturns and it will be the same again now.”
Salkeld also echoed the call from a stageful of attendees of the BC Premier’s Natural Resources Forum in Prince George last month that Canada needs to develop a world-class LNG industry on both the west and east coasts. He said that developing LNG and getting tidewater access to Canadian oil, will allow the country significantly help reduce greenhouse gas emissions around the world.
“There is no doubt that the world wants Canadian oil and gas; there is also no doubt that Canada is the best in the world at responsibly developing and producing oil and natural gas, in large part because of the innovation delivered by PSAC member companies and their employees. The services sector represents the front-line workers, Canada’s exceptional middle class that works hard every day to help advance technology through innovation and R&D, improve the efficiencies, protect the environment and reduce environmental footprint.”