Oil and gas forecasters don't predict any big jumps in drilling next year
During a period of waning investor confidence in the oil and gas industry, new forecasts suggest drilling activity will rise marginally or even decline next year.
The Petroleum Services Association of Canada said Tuesday 7,900 wells are expected to be drilled in 2018, a less than five per cent jump over current levels.
Alberta leads the way with nearly 4,000 wells drilled next year, a four per cent bump over 2017, followed by Saskatchewan, where activity is expected to pick up by three per cent to almost 3,000 wells.
The group, which represents drillers, frackers and other companies that service wells, expects West Texas Intermediate oil will remain above US$50 per barrel next year, a stabilized level but still half of what it was during boom years.
“We’re a little bit optimistic,” said Mark Salkeld, the association’s chief executive.
The Canadian Association of Petroleum Producers, meanwhile, offers a slightly gloomier view of the industry in 2018.
Oil and gas producers, which pay service companies to drill their wells, are not expected to boost spending considerably next year, given commodity price levels and challenges with slumping investor confidence in the industry, said CAPP vice-president Ben Brunnen.
“We are now having a difficult time attracting attention from the investing community,” Brunnen said, noting this impacts how much producers are able to spend.
“We’re definitely not seeing discussion about ramp up in investment. As a result of that, we think the drilling rigs are going to be generally in the range that we saw in 2017, but a bit lower.”
The lobby group expects 6,800 wells will be drilled next year, down by 400 wells from current activity.
The Petroleum Services Association of Canada was much more pessimistic about the industry a year ago, when it predicted that just 4,200 wells would be drilled in 2017.
As activity levels surpassed expectations, the group revised its outlook throughout the year and now expects nearly 7,550 wells will be drilled by year’s end.
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