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Canadian drilling hits fever pitch Services sector counting on record 22,255 wells for 2004, beating last year’s benchmark by 450, association says Gary Park Petroleum News Calgary Correspondent
The drilling frenzy in Canada, powered by the twin highs of oil and natural gas prices, is now expected to see rigs released on a record 22,255 wells this year, beating last year’s record by 450.
In its third forecast for 2004, the Petroleum Services Association of Canada said the 10,261 wells completed in the first half combined with “strong summer drilling programs” have given it enough confidence to believe that the 22,000 mark will be passed for the first time in Canada.
Natural gas is expected to account for 15,732 wells, with 5,030 oil wells and 1,493 dry holes and service wells.
Alberta is on track for a slight gain to 16,755 wells compared with 16,416 in 2003, while Saskatchewan will post a marginal drop to 4,025 from 4,157, but British Columbia is forecast to show a 25 percent gain to 1,275 from 1,024.
The association’s president, Roger Soucy, said British Columbia activity reflects a long campaign by the industry with support from provincial government incentives to spread drilling more evenly through the year by targeting areas with summer access.
“Year-round drilling allows petroleum service companies to retain their skilled field employees and plan their schedules more efficiently, which means they can provide safer and more cost-effective services to their producer customers,” Soucy said.
The Association of Oilwell Drilling Contractors is less bullish than the Petroleum Services Association of Canada, aiming for 20,412 well completions, basing its projection on strong commodity prices through the balance of 2004. Labor a problem But the Petroleum Services Association remains concerned about the shortage of skilled labor that stems from spring layoffs when soft ground forces companies to reduce their drilling activities.
Soucy said the industry is hoping more operators will “see the business case” for retaining crews through the summer.
Miles Lich, an analyst with Peters & Co. in Calgary, told the Financial Post that labor is the “biggest challenge (facing the drilling sector). That’s where you hit the wall.”
Giving further impetus to the drilling forecasts has been a recent flurry of upward revisions to capital spending by E&P companies.
Talisman Energy boosted its worldwide budget by C$443 million, including an extra C$300 million for North American projects.
“This increased spending is driven by opportunity and value creation,” said Talisman Chief Executive Officer Jim Buckee. “We have boosted our North American program with the acquisition and analysis of large amounts of 3-D seismic, detailed bottom up technical analysis and strategic land acquisitions.”
He said Talisman expects to add 7,000 to 10,000 barrels of oil equivalent per day to its production volumes for an implied on stream cost of C$20,000-$28,000 per boe a day, giving the Calgary-based independent North American output of 210,000 boe a day in 2005.
Petro-Canada, in adding to its capital expenditures, will raise North American gas spending to C$720 million from its March outlook of C$495 million, with a special focus on “attractive opportunities” in the Western Canada Sedimentary Basin and additional investments in the central Mackenzie Valley and Alaska.
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