Rig activity nears record low use rate

A drilling industry association says rig activity in Canada is down sharply this year, with the outlook not much better for 2010.

A drilling industry association says rig activity in Canada is down sharply this year, with the outlook not much better for 2010.

The Canadian Association of Oilwell Drilling Contractors said in a news release that it anticipates the active rig count this year to average 209, down 40 per cent from 351 in 2008. Next year, it added, active rigs are expected to average 218.

The association predicts that the total Canadian fleet will average 800 rigs next year, a decline from 862 rigs available during the first quarter of 2009 and 840 during the fourth quarter. Equipment will either leave the country or be retired from operation, it said.

The fleet hit a peak of 902 rigs in December 2007, noted CAODC.

The number of rig operating days during the first three quarters of 2009 was down 48 per cent from the same period last year and 58 per cent lower than for the first nine months of 2006.

The utilization rate of drilling equipment was just 23 per cent between January and September, off 40 per cent from the same period in 2008.

The association said drilling time per well this year has been about nine days, which reflects an emphasis on horizontal drilling as opposed to vertical drilling into shallow gas reserves. It cited natural gas formations in northeastern British Columbia and oil reserves in Saskatchewan as examples of areas where horizontal drilling is being widely used.

CAODC anticipates that there will be a 27 per cent rig utilization rate next year, which is close to the all-time low set in 1992.

The association is hoping for modest improvement by the end of next year, based on anticipated natural gas prices of Cdn$5.50/mcf and oil prices of US$70 a barrel (WTI).

Activity is expected to be strongest in British Columbia and Saskatchewan.

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