The Petroleum Services Association of Canada (PSAC) has revised the number of wells drilled across Canada for 2020 to 3,100 wells. This represents a decrease of 1,400 wells, or 31 percent, from PSAC’s original 2020 forecast released in October 2019.
PSAC is basing its updated forecast, released April 30, on average natural gas prices of $1.95 CDN/per million cubic feet, benchmark crude oil prices of US $24/barrel (West Texas Intermediate, (WTI)) and the Canada-US exchange rate averaging $0.71.
As of May 2, a barrel of Western Canada Select crude was selling for US $15.34, down nearly 50 per cent from a year earlier. WTI’s price was US $19.69 a barrel.
“Punishing blows continue to batter the health of this vital industry,” said PSAC interim president and CEO Elizabeth Aquin said. “The result is over $7 billion of capital investment cancelled from budgets to date, foretelling [low] activity levels not seen in decades.”
Aquin noted there is little incentive to drill for oil with prices near historic lows. “We expect to see a 38 per cent drop in activity for oil wells versus 2019 in the face of these unprecedented conditions.”
“We expect gas well drilling to fare better, however, given its smaller role in recent years, this will not make up for the decline in the quest for oil,” she added.
On a provincial basis for 2020, PSAC now estimates 1,570 wells to be drilled in Alberta, down from 2,155 wells in the original forecast. The revised forecast for Saskatchewan now sits at 1,140 wells, down 655 wells from the original forecast. British Columbia’s revised forecast is for 260 wells to be rigged, 85 wells lower than the original forecast.
Manitoba’s activity was also lowered, from 190 to 115 wells. Compared to 2019, 2020 is expected to have 37 per cent less activity.
“We must find a way to weather this storm,” Aquin said. “The world will continue to need oil and gas for decades to come. Canada, with its responsibly developed resources, should be the supplier of choice while providing jobs across the country-wide supply chain and economic benefits to all Canadians.”