The outlook for oil and gas drilling in Canada continues to darken.
The Petroleum Services Association of Canada (PSAC) again has lowered its forecast for 2019 drilling—to 5,300 wells drilled from 6,600 in the original forecast published last November.
In January, it lowered the forecast to 5,600 wells, which it measures as rigs released (OGJ Online, Jan. 31, 2019).
The new update assumes an average natural gas price of $1.65 (Can.)/Mcf at the AECO hub, a West Texas Intermediate crude oil price of $57 (US)/bbl, and an average value of the Canadian dollar of 75¢ (US).
Compared with the original forecast, PSAC expects declines to 2,685 wells from 3,532 in Alberta, to 375 from 382 in British Columbia, and to 1,960 from 2,422 in Saskatchewan. It expects increases to 260 wells from 255 originally forecast for Manitoba and to 20 from 9 in eastern Canada.
The group said investment is discouraged by lingering delays in pipeline projects that would relieve a transportation bottleneck in Alberta as well as federal proposals for regulations that would hamper work.
Duncan Au, PSAC chair and president and chief executive officer of CWC Energy services, said Canadian investment in oil production hasn’t benefited from recent cash-flow gains at exploration and production companies.
“E&P companies are reducing debt, paying dividends, buying back their own shares, and investing elsewhere rather than reinvesting in this country,” he said.
