Skyrocketing energy prices push drillers toward record
Calgary Herald, Thursday, April 29
By Scott Haggett
Coming off the busiest winter season ever, Canada's oil field service industry is still looking forward to a near-record year backstopped by commodity prices that seem to defy gravity.
The Petroleum Services Association of Canada, an industry group for the hundreds of companies that punch wells or provide services to oil and gas companies, has again boosted its forecast for wells drilled this year to 21,660. That's up 1,655 wells from the petroleum service association's January forecast and almost 2,700 more than the association's first estimate for 2004 drilling made last October.
While the forecast is still under the 21,802 wells drilled in 2003, the current high-water mark, PSAC president Roger Soucy hinted that the industry activity this year could make it a tight race for the honour.
"If I'm guilty of something it's being conservative in my well-count numbers," Soucy said. "But we think we will be very close to last year's number, but we don't expect quite the same activity in the summer and fall of this year, though we will be close."
With 6,277 wells drilled, the first quarter was the busiest winter drilling season the industry has seen and the second most active quarter ever. It has surpassed only the third-quarter of last year, when 6,907 wells were completed. Soucy thinks industry activity will drop by nearly half in the current quarter, when spring thaws keep crews out of remote areas, but rebound to an expected 6,760 wells in the third quarter and 5,259 in the fourth.
The drilling frenzy comes as oil and natural gas prices remain stronger than most had expected. Demand for both commodities, pushed on by economic growth and tight supplies, had been robust. Oil traded recently on the New York Mercantile Exchange for $37.46 a barrel while Canadian gas at the AECO hub in southeastern Alberta fetched $6.50 per gigajoule. Those prices are well above the $6 Cdn gas and $30 US a barrel used in PSAC's forecast.
As always, Alberta will be the main beneficiary of the industry activity. The province is expected to have 16,050 wells drilled this year, below 2003's 16,416. However, British Columbia will see the largest increase as incentives by the provincial government and renewed interest in the gas potential of the province's northeast by companies like EnCana spur drilling. B.C. should have a record 1,300 wells this year, a 27 per cent jump from 1,024 in 2003.
"In B.C. we're expecting a record year and it should keep growing for the next several years," Soucy said. "They have incentive in place and the province is interested in developing a better infrastructure. Not just the roads and bridges the industry needs to expand . . . but they are keen on developing a (well-servicing) capacity within the province."
Canada's frontier areas aren't among the beneficiaries of the energy industry's current optimism, though. PSAC is forecasting 25 wells to be drilled both in the Northwest Territories and the East Coast offshore. Activity in the N.W.T. is on hold until, or if, a Mackenzie Valley natural-gas pipeline is built while the East Coast is still awaiting new discoveries to stimulate activity.
"On the East Coast, they're waiting for something exciting to happen," Soucy says. "They need a discovery . . . what they're producing now has been discovered for years."
canada.com |
