Wet summer dampens Canada’s drilling forecast

Gary Park

Petroleum News Calgary Correspondent

Canada’s hopes of a record drilling year have been bogged down by a wet summer that sharply trimmed rig activity from a year ago, although industry forecasters remain hopeful of a strong fall and winter.

Well completions in June, July and August totaled 6,150, trailing the 2003 count by 14 percent, with only 372 of the available 703 rigs active, down 8 percent from last year’s count of 403 rigs.

Even so, completions to the end of August were 13,831, a 24 percent increase from the same period last year.

Although forecasters expect a strong fall and winter, the first half of September was bleak, with 302 rigs or 43 percent of the fleet at work in Western and Northern Canada, a drop of 76 rigs from the same period of 2003.

Hardest hit during the summer downturn were the shallow natural gas plays, with three of the pacesetters, EnCana, Apache Canada and EOG Resources Canada, logging 692 fewer wells in July and August than a year ago.

The breakdown of well completions for the first eight months showed 9,878 gas wells, of which 7,330 were drilled to less than 3,750 feet. Of all the completions one-quarter were listed as exploration holes, while the 10,340 development wells were up 37 percent from the same period of 2003.

August well permits down 9 percent

With coalbed methane licenses in Alberta at 802 for the first eight months, the industry remains confident that natural gas permits for the year will exceed 19,000, easily surpassing the 12-month record of 18,105 set last year.

Operators appear to have been largely unmoved by the staggering world oil prices, obtaining only 3,421 permits targeting oil prospects, lagging almost 600 wells behind last year’s pace, with the August total of 361 the lowest monthly count of the 21st century.

In August, 218 of the active rigs were licensed for gas, compared with 40 for oil.

British Columbia is cashing on its new summer drilling incentives, completing 980 wells to the end of August, up about one-third from 2003. The province had an average of 69 rigs at work for the eight-month period, a gain of 10 rigs from a year earlier, and during the June-August period showed a gain in rigs to 32 from 29.

Alberta posted a 6 percent gain in well completions to 11,114, while its 299 active rigs was a 1 percent increase.

Saskatchewan was hardest hit by the soggy weather, with its well count off 15.6 percent at 2,357 completions and its rig count down 11 percent at 36.

Of the operators, EnCana’s well completions tumbled to 722 from 1,210 and Canadian Natural Resources crashed to 95 from 248. On the upside, Husky Energy rose to 127 wells from 89 and Apache Canada made a strong gain to 115 from 61.

EnCana dominated the permit category, with 3,551 for the January-August period.