Canadian upstream operators on record-breaking drilling spree

Gary Park

Petroleum News Calgary Correspondent

The sky seems to be the limit as Western Canada’s oil and gas operators enter the peak winter drilling season.

For the first 11 months of 2003, regulators issued 23,336 new well licenses, up 43 percent from the same period last year and 1,369 permits ahead of the previous record set in 2000.

For November alone, 2,474 wells were approved for Alberta, Saskatchewan and British Columbia, including 1,535 gas-targeted holes. Of the 11-month tally, more than 60 percent or 15,453 were designated as gas intended as gas prices remained strong and show signs of soaring through the winter heating season.

EnCana continues to lead the pack, collecting 4,807 permits to the end of November, or about one in five, with Canadian Natural Resources, Husky Energy and Burlington Resources Canada leading the also-rans.

The industry is heading into the deep-freeze with rig crews operating near capacity.

The latest count shows 567 rigs or 82 percent of the fleet at work, 100 rigs ahead of a year ago, with west-central Alberta showing the way with 142 rigs active. Precision Drilling, Canada’s largest oilfield contractor, had 180 of its 224 rigs at work. Of the 417 active rigs in Alberta, 306 were hunting for gas, while British Columbia reported 103 active rigs, 38 of them searching for new prospects.

Saskatchewan’s energy department has reported a new annual record for well completions, reaching 4,075 by mid-November, beating the 1997 high by 140 wells, strengthening the province’s hopes of generating C$4.3 billion in new investment over the next decade through a package of royalty and tax cuts.

The National Energy Board has forecast Saskatchewan oil production will average 423,322 barrels per day this year, accounting for 17 percent of Canada’s total output.