FORT ST. JOHN, B.C. — If the recent modest improvement in the prices of crude oil to more than $45 per barrel U.S., and natural gas to slightly more than $2 Canadian per 1,000 cubic feet, suggest there’s any reason for major oil and gas industry economic optimism, it isn’t reflected in the latest drilling activity forecast from the Petroleum Services Association of Canada.
President and CEO Mark Salkeld says, “These are dire times for the Canadian oilfield service, supply and manufacturing sector, with no indicators for positive change in the near future.”
He says the last two Western Canadian drilling seasons were pretty much nonexistent, and in its second update to its 2016 Canadian Drilling Activity Forecast, P-SAC has revised downward by 36 per cent what it predicted in its November forecast for the number of wells likely to be drilled.
It now anticipates 3,315 wells to be drilled this year representing a drop of 18,035 from the original forecast.
An 842 well reduction represents a drop of close to 31 per cent in Alberta, where the estimate was 2,733 in November.
It’s even worse in Saskatchewan, where the revised total of 940 wells is down 849, or 47 per cent, from the previous forecast of 1,789.
The Manitoba reduction is about 42 per cent from 280 to only 162 wells. The B.C. forecast is down to 317 from 344, but this province actually fares the best of the four with only an eight per cent drop.
P-SAC based its updated predictions on an average price for natural gas of $1.60 Canadian and a crude oil price of US$35.
If aforementioned current prices hold or improve, it would appear to suggest the final year end drilling numbers could be slightly better than forecast.
Still, Salkeld says P-SAC continues to advocate for infrastructure projects like major pipelines and government funding to advance well decommissioning, in Alberta and B.C., as the best bets to put its oilfield member workers back on the job.