Oil and natural gas producers and service companies in southeast Saskatchewan are joining their counterparts in other parts of Canada in weighing in with a little optimism for the rest of this year when it comes to their professions.
In its first update in the 2017 drilling forecast, the Petroleum Services Association of Canada (PSAC) said in late January they had revised their forecast numbers upward to a total of 5,150 wells to be drilled this year, an increase of 975, or 23 per cent from their November 2016 forecast for 2017.
PSAC said they based their updated forecast on an average natural gas prices of C$3 mcf and crude oil prices at US$52.50 per barrel (West Texas Intermediate crude) with an American/Canadian exchange rate averaging 73 cents for the Canadian dollar compared with the U.S. greenback.
Mark Salkeld, president and CEO of PSAC said, 鈥渟ome of the Canadian oilfield service, supply and manufacturing sector are realizing some up-tick in activity as oil prices recover and operators increase drilling programs.鈥� He also suggested the challenges related to the prolonged downturn took their toll on the services sector with the effects rippling across all supporting industries.
鈥淚t took us many years to recover from a similar but less impactful downturn in the early 80s and it will be the same again now,鈥� he said. 鈥淭he cost savings exacted from the services sector over the last two-and-a-half years are not sustainable but that will be corrected as activity and the demand for people and equipment increases.鈥�
On the provincal fronts, PSAC now estimates that 2,706 wells will be drilled in Alberta this year, an increase from the November, 2016, forecast of 1,900 wells.
About 31 per cent more wells will be drilled in British Columbia with 367 now expected in that province, up from the 280 in the original forecast.
The hike in wells to be drilled in Saskatchewan is more modest, moving from 1,940 in the original forecast to 1,985 in the latest estimate.
There will also be a significant increase in wells in Manitoba, as they will move from an estimate of 50 wells, up to 73 in 2017.
Salkeld said, 鈥渨ith luck and favourable policies from governments in Alberta, Ottawa and Washington with respect to the new royalty regime and pipeline approvals, the Canadian oilfield services sector will pick itself up and dust itself off and get people and equipment back to work.鈥�
PSAC welcomed news that winter drilling and service and supply industries were more robust to date, which bodes well for improved levels of activity over the rest of the year.
