In its first update to the 2019 Canadian Drilling Activity Forecast, released today, the Petroleum Services Association of Canada (PSAC) has revised the number of wells drilled across Canada for 2019 to 5,600 wells.
This represents a decrease of 1,000 wells, or 15 per cent, from PSAC’s original 2019 drilling forecast released in November 2018 and reflects the deteriorating investor confidence in Canada.
PSAC is basing its updated 2019 forecast on average natural gas prices of $1.45 CDN/mcf (AECO), crude oil prices of $57.00 USD/barrel (WTI) and the Canada-US exchange rate averaging $0.76.
PSAC president and CEO Gary Mar said, “Lack of access to markets beyond the U.S. delayed again with the quashing of the approval of the Trans Mountain pipeline expansion project this year, uncertainty of any future projects being proposed should Bill C-69 be passed, and competitive issues, continue to weigh heavily on Canada’s ability to attract capital investment.
“While we are excited about the final investment decision of LNG Canada for its Kitimat LNG project, development and production activity to supply the natural gas for the facility is still years away.”
On the oil side, Alberta’s decision to curtail production has caused more uncertainty for investors resulting in producers delaying their spending decisions or moving their capital to other markets, he said.
In the meantime, the services sector is already laying off workers and struggling to stay solvent with active rig levels below 40 per cent, down from over 50 per cent at the same time last year, the time of year when activity is normally at its peak, underlining the alarming downward trend of investment.”
On a provincial basis for 2019, PSAC now estimates 2,948 wells to be drilled in Alberta, down 16.5 per cent from 3,532 wells in the original forecast.
The revised forecast for Saskatchewan now sits at 1,994 wells, down 18 per cent compared to 2,442 wells in the original forecast, while British Columbia and Manitoba are unchanged at 382 and 255 wells, respectively.
“We must find a way to help Canadians understand how responsibly we develop our oil and natural gas resources so that critical infrastructure projects can proceed,” he said.
“That’s why PSAC is proposing a Canadian Energy brand so that Canadians can show how proud they are of our record of robust regulations, high environmental standards, worker safety and human rights.
“Supplying Canada and the world with the energy it needs will lead to lower global GHG emissions, jobs and prosperity for Canadians, a win-win-win result.”
Meanwhile, association officials recently travelled to Ottawa to deliver a message to parliamentarians of the crisis occurring in Canada’s oil and natural gas industry and the need for a Canadian energy brand that includes oil and natural gas.
“We are experiencing a ‘made-in-Canada’ crisis,” said Mar. “This crisis was born by regulatory uncertainty, lack of infrastructure to access international markets, and competitiveness issues. Canada can provide responsible energy or we can let less responsible countries reap the benefits.”
According to the International Energy Agency (IEA), global demand for all forms of energy, including oil and gas, is increasing with growing populations and the rise of the middle class in developing nations. Canada’s oil and gas industry’s lack of access to markets beyond the U.S. is costing Canadians over $80 million a day.
“What other country would curtail its own production while importing foreign oil and gas, exporting billions of dollars and thousands of jobs to regimes like Saudi Arabia and Nigeria, as well as to our biggest competitor, the U.S.?” asked Mar.
PSAC recommended to parliamentarians the creation of a Canadian energy brand.
“A Canadian energy brand would showcase how responsibly we develop our resources under strong environmental standards and the rule of law, and how we are improving efficiency and reducing our GHG emissions through innovation and technology development,” said Duncan Au, chair of PSAC and president and CEO of CWC Energy Services Corp.
“A brand would help Canadians understand and be proud of our record and support critical infrastructure development so that we can continue to provide jobs, and social and economic benefits to all Canadians.”
The oil and gas industry supports over 530,000 direct and indirect jobs across Canada including manufacturing jobs in Ontario and Quebec.
The PSAC is the national trade association representing the service, supply and manufacturing sectors within the upstream petroleum industry.
PSAC advocates for its members to enable the continued innovation, technological advancement and in-the-field experience they supply to energy explorers and producers in Canada and internationally, helping to increase efficiency, ensure safety and protect the environment.
- Petroleum Services Association of Canada
