The cautious optimism and uptick in activity that led two increases in Canada’s drilling forecast for 2017 is carrying through to 2018, according to the Petroleum Services Association of Canada (PSAC).
PSAC released its projections for next year on Tuesday, forecasting a total of 7,900 wells to be drilled in Canada in 2018 compared to its revised estimate of 7,550 wells for 2017.
The 2018 forecast is based on crude oil prices of US$53/barrel (WTI), average natural gas prices of C$2.50/mcf (AECO), and the Canadian dollar averaging US$0.82.
“Budgets set with initial optimism for a gradual climb in prices by year-end continue with their plans as drilling and completion efficiencies improve,” PSAC president Mark Salkeld said in a statement.
“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.”
PSAC noted that while activity is expected to increase next year, it will still be down about 30 percent from 2014.
“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,” Salkeld said.
“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.”