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Canada set to top 20,000 wells Industry expects to log its two busiest drilling years on record Gary Park Petroleum News Calgary correspondent
Two industry organizations are counting on Canada logging its two busiest drilling years on record in 2003 and 2004, with the prospect of breaking the 20,000-well barrier this year.
The Petroleum Services Association of Canada has raised the bar for 2003 to 20,400 wells, close to 1,000 wells above the earlier forecast by the Canadian Association of Oilwell Drilling Contractors.
Both are also counting on 18,000-19,000 well completions in 2004, giving Canada successive years above the 2001 record of 17,945 wells.
The services association, noting that a record 7,000 wells were drilled in the third quarter, said average prices of C$6.50 per thousand cubic feet for gas and US$30.50 per barrel of oil have kept producers “very motivated” to drill throughout the year.
“By working to level out their annual drilling cycle, companies have been able to attract and retain employees, which sets them up well for the next phase of drilling activity,” said Petroleum Services Association of Canada President Roger Soucy.
While slightly less ambitious in its outlook, the drilling contractors association is predicting 18,023 wells in 2004 compared with the services association’s 18,965.
Martin Molyneaux, an analyst with FirstEnergy Capital, told a Petroleum Services Association of Canada conference that that oil will likely average US$27 per barrel in 2004, with gas fetching US$4.75 per million British thermal units through the year. Alberta drilling will be down The services association breakdown includes 13,835 wells in Alberta, down 8 percent from this year’s expected tally; Saskatchewan 3,800, down 5 percent; and British Columbia 1,100, up 9 percent as that province pulls out the stops to accelerate development of its northeastern gas prospects.
In addition to northeast British Columbia, Soucy said next year’s strength will be concentrated in the shallow gas areas of southeastern Alberta and southwestern Saskatchewan.
With more rigs expected to be running this winter than ever before, following new benchmarks through the past summer, the drillers’ association raised its forecast for 2003 well completions to 19,423, easily surpassing its original target of 17,532.
But if the expected 86 percent utilization rate for the fleet of 681 rigs is to be achieved in next year’s first quarter, Canadian Association of Oilwell Drilling Contractors President Don Herring said another 3,000 rig hands will be needed, pushing total employment for the three months to 15,000.
However, the drillers’ association predicts the number of rig operating days in 2004 will drop to 120,6000 from the 128,159 total expected in 2003, which should help contractors avoid last winter’s manpower squeeze when some rigs were forced to shut down temporarily to give crews time off. Rig utilization expected at 63 percent The rig utilization rate for all of this year will be about 63 percent, compared with last year’s 46 percent, and is forecast to reach 58 percent in 2004, assuming average commodity prices of $27 a barrel for West Texas Intermediate crude and $4.75 per thousand cubic feet on the New York Mercantile Exchange.
The robust state of the industry is spilling over in other sectors, including steelmaking, Illinois-based IPSCO reported.
President and Chief Executive Officer David Sutherland said the pipe-making business is on track for record sales this year and a new order for 150,000 tons of large-diameter pipe ensures production at IPSCO’s spiral mill through the first half of 2004.
He said sales to Canada rose to US$127.4 million in the third quarter from US$83.14 million a year earlier, while Canadian sales for the first nine months were C$346 million up from C$249 million.
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