In its first update to the 2017 Canadian Drilling Activity Forecast, released on January 30, the Petroleum Services Association of Canada (PSAC) has revised its forecasted number of wells drilled (rig releases) across Canada for 2017 to 5,150 wells. This represents an increase of 975 wells, or 23 percent, from PSAC’s original 2017 drilling forecast released in early November 2016.
PSAC based its updated 2017 forecast on average natural gas prices of $3.00 CDN/mcf (AECO), crude oil prices of $52.50 USD/barrel (WTI) and the Canada-US exchange rate averaging $0.73.
“Some of the Canadian oilfield service, supply and manufacturing sector are realizing some uptick in activity as oil prices recover and operators increase their drilling programs,” said Mark Salkeld, president and CEO of PSAC. Salkeld also indicates that “the challenges related to the prolonged downturn took their toll on the oilfield services sector with the effects rippling across all the supporting industries. It took us many years to recover from a similar but less impactful downturn in the early 80’s and it will be the same again now.”
“The cost savings exacted from the services sector over the last two and half years are not sustainable but that will be corrected as activity and the demand for people and equipment increases.”
On a provincial basis for 2017, PSAC now estimates 2,706 wells to be drilled in Alberta, up from 1,900 wells in the original forecast. Approximately 31 percent more wells are also expected to be drilled in British Columbia, with PSAC’s revised forecast now at 367 wells for the province up from 280 in the original forecast.
The revised forecast for Saskatchewan now sits at 1,985 wells compared to 1,940 wells in the original forecast, and Manitoba is forecasted to see 73 wells or an increase of 23 in well count for 2017.
“With luck and the favorable policies from governments in Alberta, Ottawa and Washington DC with respect to the new royalty regime and pipeline approvals, the Canadian Oilfield services sector will pick it-self up, dust itself off and get people and equipment back to work,” said Salkeld.
Oilfield services sector jobs come from keeping pipelines full so it will take some time to realize those opportunities; in the meantime we are enjoying the winter activity now and look forward to an improved level of activity over the course of 2017.
