NWT, Yukon pay drilling price

Canada’s northern regions took one of the heaviest blows from the downturn in drilling in 2006 when well completions for the first 11 months dropped 5 percent from 2005 to 21,334.

With the proposed natural gas pipelines from the Mackenzie Delta and North Slope in a state of uncertainty, the Northwest Territories and the Yukon both paid a price.

The NWT logged three exploration and three development wells, just half of last year’s total, while the Yukon was the only Canadian region to have no wells after completing two in the January-November period of 2005. Alberta recorded an 8.3 percent decline to 16,010 reflecting the drop in shallow gas and coalbed methane drilling.

The only upside was a solid gain in deeper wells, with 800 wells reaching depths of 10,000 feet and greater, a gain of 23 percent from 2005. Of the 254 rigs capable of handling those targets, the utilization rate for the 11 months was 69 percent, compared with 41 percent and 55 percent for the two shallowest formations.

Saskatchewan showed a solid increase of 3.7 percent to 3,543 well completions, while British Columbia was up 1.5 percent to 1,273 wells and Manitoba surged by almost 86 percent to 459 wells.

Bolstered by strong commodity prices, oil drilling was up 20 percent to 4,999 wells, including 792 completions in November — 365 in Saskatchewan, its best performance in two decades, and 354 in Alberta. Despite the volatility in gas prices, gas wells still accounted for almost 13,800 completions, or close to 70 percent of the total.

The early statistics for the full year point to an average rig utilization of 63 percent or 509 rigs, down from 71 percent in 2005 when 527 rigs of a smaller fleet were active. The inactive rig count was 293, the highest in four years. Investment dealer Peters & Co. forecast that drilling activity is unlikely to rebound until mid-January.

It is targeting a first-quarter utilization rate of 60-65 percent (or 510 to 533 rigs), compared with the blistering 90 percent (688 rigs) in the same period of 2006.

—Gary Park