The Petroleum Services Association of Canada (PSAC) is predicting that well drilling in 2020 will be at its lowest level in decades, Kallanish Energy reports.
In a second update, the Alberta-based national trade group said has revised the number of wells expected to be drilled this year to 3,100.
That is a reduction of 31% or 1,400 wells from the PSAC’s original 2020 forecast released last October.
Its projection is based on average natural gas prices of $1.95 (Canadian) per thousand cubic feet, crude oil prices of $24 (U.S.) per barrel and a Canada-U.S. exchange rate averaging 71 cents.
PSAC is estimating that 1,570 wells will be drilled in Alberta, Canada’s No. 1 energy province. That is down 27% from the 2,155 wells in the original forecast, it said.
The revised forecast for Saskatchewan is now 1,140 wells, down 655 wells from the original forecast. British Columbia is expected to see 260 wells drilled, 85 fewer than the original forecast. Manitoba’s drilling is expected to dip from 190 in the original forecast to 115.
Compared to 2019, 2020 is expected to have 37% less drilling activity in Canada, it said.
“Punishing blows continue to batter the health of this vital industry,” said interim president and CEO Elizabeth Aquin in a statement.
Canada’s energy industry was struggling in 2020, before it was hit by the coronavirus pandemic and the oil price rout, she said.
More than $7 billion of capital investment has been canceled from budgets of Canadian energy companies, to date, she said.
Oil well drilling is projected to drop by 38%, and gas drilling will do better, Aquin said.
