In its first update to the 2020 Canadian Oilfield Services Activity Forecast, the Petroleum Services Association of Canada (PSAC) has revised the number of wells drilled (rig released) across Canada for 2020 to 4,800 wells. This represents an increase of 300 wells, or seven per cent, from PSAC’s original 2020 forecast released in October 2019.
PSAC is basing its updated 2020 forecast on average natural gas prices of $1.85 CDN/mcf (AECO), crude oil prices of $59 USD/barrel (WTI) and the Canada-U.S. exchange rate averaging $0.76.
With some curtailment quotas relaxed, three major oilsands companies are planning higher activity this year, thereby increasing the forecast by 300 wells. Although many companies experienced a stronger start to 2020, it is believed this is primarily due to work deferred from Q4 2019 that will not translate into increased activity for the rest of the year.
PSAC president and CEO Gary Mar says, “On the gas side, there is optimism with LNG Canada underway; however, activity for the oilfield services sector for development and production is still several years out. Currently, we are still oversupplied with gas with a dearth of storage capacity and pipeline egress that will provide little incentive for new drilling.”
Oilfield services companies have begun looking at repair, maintenance and closure work as well as decommissioning, reclamation, remediation and new geothermal projects to help companies survive what is now the sixth year of the unpredicted downturn.
It is expected that closure work alone will provide $559 million of work or more, pending the new rules expected as of March 2020.
On a provincial basis for 2020, PSAC now estimates 2,460 wells to be drilled in Alberta, up 14 per cent from 2,155 wells in the original forecast. The revised forecast for Saskatchewan now sits at 1,790 wells, down five wells from the original forecast, while British Columbia and Manitoba are unchanged at 345 and 190 wells, respectively. Compared to 2019, 2020 is expected to have two per cent less activity.
Mar continues, “We absolutely must find a way to get our responsibly-developed resources to global markets to help lower GHG emissions by replacing coal and through innovation and technology, while creating jobs and prosperity for all Canadians. There simply is no good reason to do otherwise.”