Labour shortage to limit expansion

Drilling for oil is forecast to jump in 2012 but a leading industry group says any significant growth in the sector will be stymied by an ongoing labour shortage.

CALGARY — Drilling for oil is forecast to jump in 2012 but a leading industry group says any significant growth in the sector will be stymied by an ongoing labour shortage.

The Petroleum Services Association of Canada released its 2012 Canadian Drilling Activity Forecast Thursday.

It predicts a total of 15,100 wells across Canada for next year – an increase of 10 per cent over 2011 levels.

“Although it’s still a long way from the almost 25,000 wells of 2005 it represents a positive signal regarding the health of our industry and a return to activity levels of a few years ago,” said PSAC president Mark Salkeld.

The major shift, he said, is a marked increase in the number of oil wells that will be drilled. Oil will represent 80 per cent of all wells drilled while natural gas will drop by six per cent due to continued low prices and an abundance of supply.

There will also be an increased focus on horizontal drilling, which takes advantage of new technology and will likely account for 50 per cent of the total well count.

PSAC is basing its forecast on commodity prices of C$3.50 per thousand cubic feet for natural gas and a West Texas Intermediate price of US$85 per barrel.

PSAC’s incoming chairman said the numbers are on the conservative side but added the effect of a downturn are lingering and led to equipment and labour shortages.

“Our sector continues to deal with the fallout from a few years ago when we saw an exodus of labour from workers out of our region and they haven’t returned,” said Mike Edmonds.

“Equipment has been moved to other operating jurisdictions so the registered rig count, we expect, is going to be relatively flat and there’s no expectation in the near future that equipment is going to return to our key operating zones.”

Labour has either moved to jobs in other sectors or to other jurisdictions, such as the U.S., Mexico and overseas.

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