The Petroleum Services Association of Canada has lowered, for a second time, its forecast for the number of wells that will be drilled in 2019 across Canada.
PSAC’s midyear forecast calls for 5,300 wells to be drilled – a drop of 1,300 or 20 per cent from the original forecast of 6,600 issued in November 2018.
In a news release on Wednesday, PSAC said it based its updated forecast on an average natural gas price of C$1.65 per 1,000 cubic feet, crude oil price of US$57.00 per barrel (West Texas Intermediate), and a Canada-U.S. Canada exchange rate averaging 75 cents for every American $1.
“It is unconscionable that we continue to thwart our own prosperity, driving capital investment that creates good middle-class jobs and economic benefits for all Canadians to other countries while we make no dent whatsoever in global GHG (greenhouse gas) emissions for our loss,” said PSAC president and CEO Gary Mar.
“Clearly, cash flow for our E&P [exploration and production] customers has improved with higher WTI prices and narrower WCS differentials, but that has not translated to re-investment in new crude oil production. Instead, E&P companies are reducing debt, paying dividends, buying back their own shares and investing elsewhere rather than re-investing in this country. As a result, we have seen oilfield service companies laying off employees this past winter season in what traditionally is the busiest time of year,” said Duncan Au, PSAC chair and president and CEO of CWC Energy Services.
PSAC now estimates 2,685 wells will be drilled in Alberta, down from 3,532 in the original forecast. British Columbia’s expected well count has been lowered from 382 to 375 wells. The revised forecast for Saskatchewan sits at 1,960 wells from 2,422 in the original forecast, and Manitoba is forecasted to see 260 wells or five more. Eastern Canada’s well count has been raised from nine to 20.
“On a positive note, closure activity – decommissioning, remediation and reclamation activity, has intensified. With increased funding to the Orphan Well Association and the new Area Based Closure program introduced by the Alberta Energy Regulator, more well sites are being decommissioned providing additional work for services companies when they sorely need it,” said Mar.
“Delays of critical pipeline infrastructure for oil … and regulatory uncertainty with the impending passage of federal government Bills C-69 and C-48, however, continue to dampen hopes of increased capital investment and a robust oil and gas industry this year. Opportunity is at our door. We must find ways to communicate our responsible energy development to all Canadians to foster support for this vital industry that provides jobs and economic benefits to Canadians from coast to coast.”
– Mario Toneguzzi for Calgary’s Business
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