By Ian Campbell
They’ve updated their forecast for the coming year and it’s not great news for the energy sector.
In its first update to the 2016 Canadian Drilling Activity Forecast, the Petroleum Services Association of Canada (PSAC) has revised the forecasted number of wells drilled.
Experts now anticipate 4,900 wells will be drilled nationally, that’s a decrease of 250 or a five per cent decline.
It’s being based on average natural gas prices of $2.50 CDN/mcf (AECO), crude oil prices of US $38/barrel (WTI) and the Canadian-US exchange rate averaging $0.72.
“Factors including oversupply, North American reserves near capacity and low cash flows continue to support the ‘lower for longer’ outlook being echoed around the province and industry. These challenging circumstances are taking their toll on the oilfield services sector just like all other sectors of the energy industry and the effects ripple across all the supporting industries. I’m afraid we are not out of the woods yet.”
In Alberta, the prospects are less grim.
They now anticipate 2,718 wells will be drilled, down from the 2,733 originally estimated. British Columbia is looking at a four per cent drop, Saskatchewan sits at 1,643 wells, down from 1,789 and Manitoba will see 205 wells, a drop of 75.
“The lack of progress on nation-building projects, such as pipelines to tidewater, is counter-productive to Canadian energy resource development. In turn, this is hindering Canadian from being a country that can help other countries in need of oil and gas resources.”
“We have the third largest oil reserves in the world, but we have less than four per cent of the global market share. We’re resilient and we’re extremely good at what we do in the energy sector. We’ll come out of this slump, but we’re getting in the way of our own success. not moving forward on infrastructure projects even though we have a solid track record of responsible energy and resource development, is hurting us and areas of the world that would benefit from what we have to share.”
The analysis comes on the heels of a National Energy Board report that says crude oil prices are projected to rise to more than US$100 a barrel by 2040.