PSAC: Canadian drilling slump to continue
Expectations for oil and gas drilling in Canada continue to fade.
The Petroleum Services Association of Canada (PSAC) projects drilling of 4,500 wells in Canada during 2020, based on rig releases, compared with 5,000 expected this year.
This year’s expected well total is down 100 from PSAC’s third update of its 2019 projection in July and down 1,600 from its forecast of a year ago (OGJ Online, May 2, 2019).
The 2020 forecast assumes an average natural gas price of $1.60/Mcf (Can.) at the AECO hub and an average West Texas Intermediate crude oil price of $58/bbl (US).
PSAC Pres. and Chief Executive Officer Gary Mar blamed the darkening outlook on transportation bottlenecks and regulation.
“Following a very disappointing 2019 that saw activity plunge to 2015-16 levels with about 2,000 fewer wells drilled than forecast, the outlook for 2020 is even worse with exploration and production companies choosing to buy back their own under-valued shares, pay dividends, and pay down debt rather than reinvest in Canada,” he said. “It’s hard to justify spending or attract new capital investment when market access constraints remain and policy uncertainty persists.”
PSAC projects drilling decreases from 2019 levels of 235 to 2,155 wells in Alberta, 200 to 1,795 in Saskatchewan, 20 to 190 in Manitoba, and 45 to 345 in British Columbia.
It expects 2020 drilling in eastern Canada to be unchanged from this year’s expected level of 15 wells.
