Fluctuating energy commodity prices have prompted an industry trade association to forecast that there will be fewer oil and gas wells drilled in Western Canada next year.
The Canadian Association of Oilwell Drilling Contractors announced on Tuesday that it expects 10,409 wells to be drilled in 2013. That would be six per cent fewer than the 11,067 wells CAODC is projecting for this year.
The well count was 12,877 in 2011, and as recently as May of this year CAODC was projecting a 2012 tally of 11,843.
In addition to uncertain oil and natural gas prices, the association pointed to the more complex drilling programs that are being undertaken as a reason for its reduced well count. Its expects that it will take an average of 11.4 days to drill a well in Western Canada next year.
CAODC anticipates that if 10,409 wells are drilled in 2013, this will equate to about 118,401 operating days.
It expects its members to have 830 registered rigs at the beginning of 2013. That would be up by about 30 from the previous year, but further growth in the fleet during 2013 isn’t expected.
“It’s more likely contractors will retire older equipment,” said CAODC president Mark Scholz in a news release. “The retirement of older equipment has been an ongoing trend over the last three years as the newer, more advanced equipment is better suited to explore unconventional plays.”
2013 is expected to be active at the outset, with about 498 drilling rigs — or 60 per cent of the fleet — to be in use during the first quarter.
With spring breakup, the utilization rate is projected to drop to 20 per cent (166 rigs) in the second quarter, said CAODC, with the third quarter rate anticipated to hit 35 per cent (291 rigs), and activity in the final three months of the year to reach 45 per cent (374 rigs).
Despite the reduced well count, CAODC said its members continue to cite a skilled labour as a significant challenge.