Number of Oil Well Drills Expected to Increase in Canada Next Year

It has been estimated that 5,400 wells will be drilled in Canada in 2022, according to the Petroleum Services Association of Canada (PSAC). Improved second-half activity has also resulted in a higher forecast for 2021.

“For 2022 we expect drilling activity to be higher than 2019. But, although we’ll be back to pre-COVID levels, we’re not going to be near where we were pre-downturn,” said Gurpreet Lail, PSAC’s president and chief executive officer.

“Global supply-demand imbalances are leading to higher commodity prices, and we expect drilling activity to increase out of necessity. However, at the same time, we’re also seeing a severe labour shortage, which has the potential to impact how much growth the industry can achieve in the coming year.”

PSAC’s final 2021 forecast was based on average natural gas prices of $3.60 CDN/mcf (AECO), crude oil prices of US$67/barrel (WTI), and the Canadian dollar averaging $0.80 USD.

AECO natural gas is expected to cost $4.10 CDN/mcf in 2022, according to PSAC’s forecast for WTI oil.

“Although the activity outlook is brighter than a year ago, exploration and production (E&P) companies are not deviating from strict capital discipline and are staying the course on preferring share buybacks, paying down debt, and increasing or issuing dividends,” said Lail.

On a provincial basis, PSAC estimates the following drilling activity for 2022:

• 3,125 wells in Alberta, representing a year-over-year increase of 450;

• 1,495 wells for Saskatchewan, an increase of 198 wells;

• 605 wells in British Columbia, a year-over-year increase of 79 wells from 526 drilled in 2021;

• 160 wells drilled in Manitoba, up 21 wells from the 139 drilled in 2021; and

• 15 wells expected for Eastern Canada, up from 13 wells the previous year.

The majority is expected to occur in the Montney and Viking formations, similar to activities in 2021.

“The pandemic brought an extraordinary level of challenge to an already tense industry environment,” said Lail.

PSAC also said Canada can be a world leader in responsible energy development.

“For decades, companies within our sector have made huge investments to advance innovation for sustainable oil and gas development, including lower GHG emissions,” said Lail.

“However, the point of view that hydrocarbons can’t be any part of a sustainable future — even with responsible production and new carbon technologies — is a major setback for Canada and for our industry.”

PSAC urged the government to come up with coherent approaches that include clear policies to advance opportunities in carbon capture, utilization, and storage, and policies for commercial development of blue hydrogen from natural gas.

Original source material for this article taken from here