Saskatchewan will see a 16-per-cent increase in drilling activity to 3,050 oil and gas wells in 2011, the largest increase of any province, the Petroleum Services Association of Canada (PSAC) said in its latest forecast.

The 2011 Canadian drilling activity forecast, released Monday in Calgary, forecasts a total of 12,250 wells across Canada this year, up eight per cent from the projected final tally of 11,350 for 2010.

 

"This past year has been a turnaround year for the industry," said Roger Soucy, outgoing president of PSAC, which represents about 250 service, supply and manufacturing companies in the upstream petroleum industry.

 

"We are anticipating a 35-per-cent increase in wells drilled over 2009 to 11,350. Although still a long way from the almost 25,000 wells of 2005, it represents a new beginning on a number of fronts," Soucy said in a news release.

 

On a provincial basis, PSAC estimates 7,915 wells will be drilled in Alberta and 700 in B.C., representing an increase of five per cent and one per cent, respectively, over 2010 drilling levels.

 

Drilling in Manitoba will see a 10-per-cent increase to 550 wells, while Saskatchewan is expected to lead the way with a 16-per-cent increase or about 420 wells.

 

Soucy said oil and gas drilling activity is predicated on price, so oil drilling is expected to increase and gas drilling to decrease.

 

"In 2011, oil prices will be adequate to sustain oil activity. As a result, we are forecasting an increase in drilling in oil areas, like Saskatchewan and northeast Alberta," said Soucy, who retires at the end of the month.

 

"Gas pricing, on the other hand, remains relatively low and we are not expecting any significant gas price turnaround in 2011. That, combined with industry's focus on shale gas drilling, has led us to forecast an 11-per-cent drop in the conventional shallow gas drilling area of southeast Alberta."

 

PSAC is basing its 2011 forecast on average natural gas prices of $4 per thousand cubic feet and crude oil prices of $80 US per barrel.

 

Last week, the Canadian Association of Oilwell Drilling Contractors said it expected 11,587 wells to be drilled this year. The association took a slightly less optimistic view for 2011, predicting a two-per-cent increase to 11,811 wells.

 

Also last week, investment brokerage UBS forecast 13,000 oil and gas wells will be drilled in Canada in 2011, up from 11,600 predicted for this year.


Source: www.leaderpost.com