Saskatchewan leads drilling activity in Western Canada
The Bakken boom fuels an 11 per cent jump in forecast wells
Strong oil prices will lead to an upswing in drilling activity according to the Petroleum Services Association of Canada (PSAC). The Calgary-based trade association that represents the service, supply and manufacturing sectors in the upstream petroleum industry made that prediction recently in an update to its 2011 Canadian Drilling Activity Forecast.
“Due to strengthening oil prices and innovations in technology, we expect 2011 to continue to see modest increases in drilling levels from 2010, recognizing shortages in skilled labor that restrict the ability of drilling and petroleum service providers to realize full output capacity,” PSAC president Mark Salkeld said.
PSAC predicts that 12,750 wells will be drilled across Canada in 2011, an increase of 500 wells from its original 2011 forecast. The updated forecast is based on average crude oil prices of US$85 per barrel and average natural gas prices of $3.84 per thousand cubic feet. In 2010 a total of 12,158 wells were drilled across Canada.
PSAC is also estimating 8,390 wells will be drilled in Alberta this year – an increase of three per cent over 2010 drilling levels. But the biggest spike in drilling levels will be in booming Saskatchewan where the drilling rate is predicted to rise by 11 per cent over 2010 levels to 3,075 wells. PSAC estimates 700 wells will be drilled in British Columbia, which would be a seven per cent increase from 2010 drilling levels. Manitoba is also forecast to see a one per cent increase in drilling activity. The association predicts 550 wells will be drilled there in 2011.
The only regions where drilling activity is not expected to increase are in Eastern Canada and the North. Shale gas exploration is taking place in Quebec and in certain areas of the Maritimes, but environmental concerns about shale gas exploration technology are holding back progress on projects in both regions.
In Canada’s North, the $16.2-billion Mackenzie Gas Project was approved by the National Energy Board in December. However, the project’s proponents – led by Imperial Oil – have not committed to build it. Even if the proponents do decide to build the pipeline, construction likely won’t begin until 2015, and few companies are itching to sink millions of dollars into the North on drilling programs when any discoveries could take a decade (or more) to flow through the pipeline and reach southern markets.