PSAC forecasting 7,900 wells drilled in 2018, better than 2017

Mark Salkeld, CEO of Petroleum Services Association of Canada(PSAC).

2018’s activity to be better than 2015, 2016 and 2017

The Petroleum Services Association of Canada (PSAC) released its 2018 Canadian Drilling Activity Forecast, with an expectation of 7,900 wells drilled in Canada, according to a press release.

For 2017, the association’s final revised forecast predicts a yearly total of 7,550 wells.

PSAC bases its 2018 forecast on average natural gas prices of $2.50 CDN/mcf (AECO), crude oil prices of US$53/barrel (WTI), and the Canadian dollar averaging $0.82USD.

“The small uptick in activity we realized in Q1 of 2017 has carried on through the year. Budgets set with initial optimism for a gradual climb in prices by year-end continue with their plans as drilling and completion efficiencies improve,” said Mark Salkeld, PSAC President.

On a provincial basis for 2018, PSAC estimates 3,998 wells to be drilled in Alberta, and 2,931 wells for Saskatchewan, year-over-year increases of 152 and 84 wells, respectively.

“Due to pressure to stay low, costs for services continue to be suppressed affording better margins for producers. For 2018, confidence that oil will stay in the low-to-mid US$50 range as markets tighten and inventories reduce, along with growing interest in Canada’s vast liquids rich natural gas, should support a 4 – 5 per cent increase in activity levels,” said Salkeld.

At 230 wells, drilling activity in Manitoba is expected to remain constant year-over-year whilst activity in British Columbia is projected to increase from 612 wells in 2017 to 730 wells in 2018.

“The cancellation of TransCanada’s Energy East pipeline is another blow to investor confidence in Canada and so PSAC will continue to advocate hard for market access and a competitive environment. The world’s energy needs are growing and polls show that countries would prefer Canadian oil and gas that is responsibly-developed and working to reduce carbon emissions through innovation,” said Salkeld.

Although the association expected 2018’s activity to be better than 2015, 2016 or 2017, the projected total of 7,900 wells is still 30 per cent lower than the number of wells drilled in 2014.

“Market access and development of our natural resources would not only help reduce global emissions and help lift third-world countries out of energy poverty, but would continue to benefit Canadians too by providing energy security, LNG for remote and northern communities, great high-tech jobs and world prices for our resources so that they can continue to provide economic benefits to all Canadians,” Salkeld concluded.