CAODC sees increased western Canada drilling activity

By OGJ editors
-- The Canadian Association of Oilwell Drilling Contractors (CAODC) in its latest drilling forecast for western Canada expects a 24% increase in rig activity during the last three quarters of 2011 compared with its Oct. 22, 2010 forecast.

CAODC said rig utilization in this year’s first quarter averaged 68% in western Canada—about 11% higher than its Oct. 22 projection. During the quarter, an average 534 rigs were drilling, up from the 480 expected last October.

The first-quarter strength in activity was based on high commodity prices, a favorable investment climate, and good geology, CAODC said.

In the first quarter, CAODC said utilization averaged:

• 67% (385 rigs out of 571 available) in Alberta.

• 71% (78 rigs out of 109 available) in Saskatchewan.

• 64% (56 rigs out of 88 available) in British Colombia.

• 77% (14 out of 18 rigs available) in Manitoba.

• 50% (1 rig out of 2 available) in Northwest Territories.

CAODC forecasts that an average 200 rigs out of 800 available will be drilling during the spring breakup in the second quarter. This is up from 160 rigs forecast last October.

During the third quarter, its adjusted forecast calls for 467 rigs drilling on average, or 58% utilization of an increasing fleet of 805 rigs. Its forecast for the last 3 months calls for 530 active rigs, or a 65% utilization of a fleet of 815 rigs.

CAODC expects that the rigs will drill 13,128 wells in 2011, an 11% increase compared with the 11,811 wells projected last October. Its forecast now assumes 11.8 days/well up from 10.8 days/well in the October forecast.

The forecast also confirms the shift to oil-well completions, away from natural gas drilling. CAODC said about 60% of the wells are directed at oil and the wells are increasingly horizontal with multistage fracs. Multistage fracs are most prevalent in the Bakken play in Saskatchewan and Manitoba, but also are used in the Cardium and Viking areas of Alberta, CAODC said.

CAODC noted that the natural gas drilling focus is on resource plays that have high liquids content, with shallow gas completions down substantially.

For its forecast, CAODC assumed a $90/bbl (WTI) for oil and $4(Can.)/Mcf for natural gas.

For all of 2011, the forecast calls for an average 433 rigs active in western Canada out of an average 802 rigs available.

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