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Decline in drilling forecast

The Petroleum Services Association of Canada is forecasting a decline in drilling activity next year, although well counts are becoming decreasingly relevant as a measuring stick of industry activity.

The Petroleum Services Association of Canada is forecasting a decline in drilling activity next year, although well counts are becoming decreasingly relevant as a measuring stick of industry activity.

PSAC announced on Wednesday that it’s projecting that there will be 10,800 wells drilled in 2014, which would represent a 1.5 per cent decrease from the 10,960 wells the association expects to be drilled this year.

Last year the count was 11,088 and in 2011 it was 12,854.

Mark Salkeld, PSAC’s president and CEO, pointed out that improved drilling techniques — most notably the combination of hydraulic fracturing and horizontal drilling — are revolutionizing the industry.

“Quite simply, large-scale use of these kinds of technologies is creating a trend to fewer wells overall,” he said.

“By maximizing our use of technology, industry can increase production from existing wells, access more and deeper zones, and restart production from wells that have been shut in.

“This means we can maintain or even increase production, while drilling fewer new wells. In fact, one well today can be the equivalent of two, three or more wells drilled just 10 years ago.”

On a provincial basis, PSAC is forecasting that 6,555 wells will be drilled in Alberta next year, down slightly from the 6,567 projected for 2013.

The tally in Saskatchewan is expected to hit 3,1967 in 2014, down 3.5 per cent from 3,312; Manitoba drilling is projected to reach 480, up 7.7 per cent from 520; and British Columbia wells are anticipated to number 550 next year, up 2.2 per cent from 538 in 2013.

PSAC’s 2014 forecast is based on an average price for crude oil of US$95 a barrel (WTI), and for natural gas of C$3.50 per thousand cubic feet (AECO).

“We are slightly optimistic about gas prices toward the end of 2014, however we expect little change in next year’s drilling levels for gas,” said Salkeld.

PSAC represents the service, supply and manufacturing sectors of the upstream petroleum industry, with nearly 260 member companies.