The Petroleum Services Association of Canada forecasts a total of 15,100 wells to be drilled across Canada in 2012, an increase of 10% over the expected final tally of 13,700 for 2011.
“Drilling activity levels are increasing,” said PSAC Pres. and Chief Executive Officer Mark Salkeld. “Generally, activity continues to increase across all major activity areas, and we are optimistic that activity is going to continue to rise in the years ahead.”
PSAC’s annual report for 2012 estimates that Saskatchewan will see a 15% increase in drilling, with a total of 4,650 wells. Alberta will see a 9% rise, with 9,255 wells to be drilled. British Columbia will see 640 wells, a rise of 4%. Manitoba’s increase will be 1%, with 525 wells.
“In 2012, oil prices will be adequate to sustain oil drilling related activity,” Salkeld said. “As a result, we are forecasting an increase in drilling for oil in regions like central and southern Saskatchewan and northeast Alberta.”
Salkeld said that gas pricing remains relatively low, with no significant gas price turn around in 2012. As a result, PSAC expects that 80% of wells drilled in the basin will be oil- and liquids-rich gas wells—6% higher than the expected 74% in 2011.
PSAC said it is basing its 2012 Forecast on average natural gas prices of $3.50 (Can.)/Mcf (AECO) and crude oil prices of $85/bbl (WTI).
Meanwhile, analyst Claudia Mann of IHS Global Insight noted PSAC’s predictions but suggested that Canada’s Northwest Territories may also be due for increased activity.
“While the PSAC expects most of the new activity to come from wells in central and southern Saskatchewan and northeast Alberta, a new rush appears to be setting in for oil exploration just below the Arctic Circle in the NWT,” said Mann.
According to Mann, Husky Energy Inc. is preparing roads, an ice bridge and a landing strip for exploratory drilling of two wells just beneath the permafrost in February 2012.
Mann also notes that apart from Husky, MGM Energy Corp, ConocoPhillips, Canada Resources Corp., Shell Canada, and Imperial Oil all hold interests in the area.
“MGM has plans to explore more sophisticated drilling work, starting from 2013,” Mann said, adding that the Mackenzie River Valley could eventually become a “new frontier” for liquid hydrocarbon production.
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