The Petroleum Services Association of Canada (PSAC) expects drilling activity to remain stable in Saskatchewan, according to its 2016 Canadian Drilling Activity Forecast, which was released on Tuesday.
PSAC projects 5,150 wells (rig releases) will be drilled in Canada in next year. The organization’s forecast suggests that next year will see the same slumped activity that hit the sector hard in 2015.
They believe the bottom has levelled off, as PSAC expects 2015 will finish with a total of 5,340 wells drilled.
PSAC bases its 2016 forecast on average natural gas prices of $2.75 CDN per metric cubic foot (AECO), crude oil prices of US$53/barrel (WTI), and the Canadian dollar averaging $0.75 US.
“Low commodity prices, oversupply and low cash flows obviously impacted us significantly in 2015, resulting in an over 50 per cent loss of activity from previous year averages,” said Mark Salkeld, the president and CEO of PSAC. “With those same factors continuing, we can’t expect anything better for 2016.”
On a provincial basis for 2016, PSAC estimates 1,789 wells will be drilled in Saskatchewan, which is up marginally from the 1,785 forecasted for this year. Alberta will see a slight decline from 2,817 to 2,733 wells.
Manitoba sees a slight improvement in activity, with a forecasted increase of 32 wells from 248 to 280. Offsetting the gain in Manitoba’s rig counts, British Columbia’s estimate will drop from 478 to 344 wells.
For the country as a whole, the 2015 year-end estimate of 5,340 wells drilled and next year’s forecast of 5,150 wells represents drops in activity of over 50 per cent from a five-year average of 11,670 wells per year, before the oil prices collapsed at the beginning of 2015.
“Ongoing market access issues, and an environment of regulatory and policy uncertainty, has meant Canada’s energy sector hasn’t been able to make anything better out of a bad situation that began in 2015,” said Salkeld. “We have the third largest oil reserves in the world, but have less than four per cent of the global market share.
“We’re resilient, yes, but as a country we need to get on with addressing the issues that are limiting our resource sectors, especially our energy resources, from contributing to the country’s prosperity and its reputation as a responsible developer of
Next week’s edition of the Mercury will have more on this story.