Drilling activity forecast to jump 24% in Western Canada

CALGARY – Drilling activity in Western Canada will jump by 24 per cent over the rest of the year as producers shift toward lucrative oil wells from natural gas, according to a new industry forecast.

A fervid pace of activity during the first quarter will continue over the course of the year, the Canadian Association of Oilwell Drilling Contractors said Wednesday.

The association also bumped up its well count to 13,128 completions for the year, up 11 per cent from the 11,811 wells reported in its October forecast.

“This revision shows a significant change in the level of activity anticipated over the balance of the year and is predicated on the high level of activity observed in the first quarter of 2011, the winter drilling season,” the association said in a statement.

Approximately 54 per cent of Western Canada’s drilling rig fleet will be running this year, compared to 43 per cent a year ago.

An estimated 433 rigs out of a fleet of 802 will be active this year, with the highest percentage, 65 per cent, active during the fourth quarter when the winter drilling season starts.

This year’s uptick in action compares to a devastating 24 per cent utilization averaged at the height of the recession in 2009 when producers were reeling from sharply reduced oil and natural gas prices.

Crude prices rebounded over the past 18 months to breach $113 US per barrel in November, leaving natural gas far behind as new production from shale gas plays flooded an indifferent market.

More than half of the wells being completed in Western Canada are for oil, and are increasingly horizontal, the association said. Operating days, key indicators of profit for drilling companies, are expected to increase by 20 per cent from last fall’s forecast, to 154,300.

Calgary Herald