The Petroleum Services Association of Canada has for the second time this year reduced its estimate of the number of oil and natural gas wells that will be drilled in 2012, citing the effect of continued low natural gas prices.
PSAC, which represents the service, supply and manufacturing sectors in the country's upstream industry, said it now expects 12,500 wells to be drilled this year, down from the 13,150 wells it estimated in April and 3% below 2011 numbers. The April projection was nearly 2,000 wells below the 15,100 wells the group projected for 2012 in a November.
"Commodity prices on the natural gas side of things have had a big impact on activity levels so far this year," PSAC President Mark Salkeld said in a Tuesday statement. Drilling activity also "has been impacted by key shifts in the global economy, including the European debt crisis and the decline in demand coming from Asia," he said.
PSAC is basing its updated 2012 Forecast on average natural gas prices of C$2.50/mcf at the AECO hub in Alberta and crude oil prices of US$90/barrel for WTI.
"We are cautiously optimistic about activity levels staying at or around the 2011 well count, with activity more weighted towards liquids rich gas and oil," Salkeld added.
PSAC projects 663 wells will be drilled this year in Manitoba, up 14% from 2011, while Alberta and British Columbia will see declines of 4% to 7,795 wells and 22% to 485 wells, respectively.
