Despite indications that the global economy is on the mend, and a strengthening of oil prices, the Petroleum Services Association of Canada remains pessimistic in its outlook for the oilpatch.
The Calgary-based trade association, which represents some 270 service, supply and manufacturing companies in the upstream petroleum industry, said on Monday that it has revised downward its forecast of drilling activity in Canada this year.
PSAC is now projecting that 9,500 wells will be drilled in 2009. That’s down from the 10,000 wells the association was forecasting in April.
In 2008, there were 17,043 wells drilled in Canada, and in 2007 the figure was 18,557. PSAC bases its count on rig releases from well sites.
A news release issued by PSAC said its latest forecast is actually more optimistic than others in the industry. It attributed this to a recent update of its annual well cost study that indicates service costs have decreased.
Also reducing the sting of low energy commodity prices — especially in the case of natural gas — is the Alberta royalty credit and new well incentive programs, said the association.
“We believe the decrease in costs will be enough to sustain a certain degree of activity, even in the face of continuing low natural gas prices,” said PSAC president Roger Soucy. “Unfortunately though, the decrease is not enough to offset a further slide in activity over what was predicted earlier this year, with PSAC now forecasting a near 45 per cent decrease over drilling activity levels in 2008.”
The biggest decline is expected in Alberta, with PSAC anticipating that 6,265 wells will be drilled here this year, down 46 per cent from 2008. British Columbia will see an 18 per cent decrease to 690 wells, and Saskatchewan will fall 45 per cent to 2,275 wells, said PSAC.