|
Canada expects to turn upstream corner; 4% activity uptick forecast
Gary Park For Petroleum News
The first official industry stab at forecasting Canadian upstream activity in 2010 targets a 4 percent increase from 2009 in the drilling rig count in Western Canada to an average of 218.
The Canadian Association of Oilwell Drilling Contractors expects the number of drilling days will rise by about 4,000 to 78,480, with most of the improvement occurring in the third quarter, with a slight gain in the final quarter.
In its update, the association is targeting 8,278 wells this year for a rig utilization rate of 28 percent, compared with 16,844 wells in 2008 and a utilization of 40 percent.
For 2010, the well count is predicted to reach 8,523, with rig utilization starting at 40 percent in the first quarter and averaging 27 percent for the year — the third straight year of subeconomic conditions and close to the previous all-time low in 1992.
Association President Don Herring said the marginal increases are tied to expectations of higher natural gas prices in the second half of 2010, but the industry will still be working at half the pricing levels of 2008 and only one-third of those in 2006 and 2007.
Fewer rigs in fleet As a result, he said some rig equipment is being moved out of Canada and some is being retired.
The Canada-wide drilling fleet, which peaked at 902 in 2007, is expected to drop to about 800 in 2010, down from 862 in the first quarter of this year.
The association is basing its forecasts on gas prices of C$5.50 per thousand cubic feet and West Texas Intermediate oil at US$70 per barrel.
Preliminary estimates by the Canadian Association of Petroleum Producers set oil and gas investment spending for 2010 at C$40 billion, up C$6 billion from 2009, but well short of the C$54 billion in 2008.
The industry’s leading lobby group is counting on about 8,000 well completions in Western Canada this year and 9,500 in 2010, driven by the recovery in oil prices.
The Small Explorers and Producers Association of Canada is hoping for a modest rise in capital spending next year for junior and mid-cap companies, with the emphasis on light and heavy oil prospects.
| 