The drilling outlook in Canada is weakening, according to the Petroleum Services Association of Canada (PSAC).
In the third update of its 2018 drilling forecast, the trade group lowered its forecast for wells drilled, which it measures as rigs released, to 6,900 from 7,400 in the April revision.
The projected total is down about 200 wells from last year. PSAC expects total depth drilled to be unchanged or slightly up from 2017.
Compared with its original forecast for 2018, PSAC has changed its projections for rigs released to 3,735 from 3,998 for Alberta, to 464 from 730 in British Columbia, to 2,428 from 2,931 in Saskatchewan, and to 260 from 230 in Manitoba.
The projection assumes average prices of $1.55/Mcf (Can.) in Alberta for natural gas and $65/bbl (US) for West Texas Intermediate crude oil, with the Canada-US exchange rate averaging 77¢.
Tom Whalen, president and chief executive officer of PSAC, said an average discount of $21/bbl for Western Canadian Select crude against WTI during the first half “means that exploration and production companies and Canadians are missing out on approximately $15 billion annually.”
He said the Canadian gas industry estimates the disparity between Alberta gas prices and prices elsewhere costs producers $10 billion/year.
