CALGARY – Oil and gas drilling is set to stage a modest rebound in 2017 but will remain well below activity in 2014, according to a forecast from the Petroleum Services Association of Canada.
The Calgary-based association, which represents oilfield services companies, said on Wednesday it expects 4,175 wells will be drilled next year, up about six per cent from an anticipated total of 3,950 wells this year.
The 2017 forecast is 63 per cent lower than the number of wells drilled in 2014, when benchmark U.S. oil prices began their fall from more than US$100 per barrel to current levels under US$50 per barrel.
Drilling contractors have laid off thousands of employees in the past two years, said PSAC president Mark Salkeld, adding a major challenge will be finding workers to support even a modest recovery in drilling.
“We felt the slowdown in the spring of 2014 … and we started laying off back then,” he said.
“So there are people that have been gone out of this industry, gone home, gone to other industries, for two years. So there’s opportunity, absolutely, but it’s going to be a struggle to bring it back.”
He said the global supply of oil and gas is expected to continue to exceed demand in 2017, leaving little optimism for a significant rebound in price or activity.
Ben Brunnen, vice-president of oilsands for the Canadian Association of Petroleum Producers, said his organization also expects a slight improvement in activity in 2017.
During a presentation at PSAC’s annual convention, he unveiled a preliminary capital investment forecast of $37 billion in the Canadian oil and gas industry next year, up from $36 billion in 2016 but lagging $54 billion in 2015 and more than $80 billion in 2014.
Analyst Jeff Fetterly of Peters & Co. said oilfield activity in Canada has been “terrible” this year but there are signs of improvement as oil and gas producers enter November and begin to formulate 2017 capital budgets based on recent stronger prices.
“We think there is the potential a couple of operators might … pull some capital forward from 2017 (budgets) into 2016,” he said.
On a provincial basis, PSAC expects most of the drilling increases next year to take place in Saskatchewan, with 240 more wells than in 2016 for a total of 1,940.
Alberta is expected to see a year-over-year increase of 53 wells for a total of 1,900. B.C. and Manitoba are both expected to experience declines.
In September, the Canadian Association of Oilwell Drilling Contractors revised its 2016 well count forecast lower to 3,562. It said, if correct, the annual drilling level would be the worst in almost four decades of record keeping.
Canada’s largest driller, Calgary-based Precision Drilling, reported recently that it has begun rehiring staff in anticipation of a busier winter drilling season based on customer bookings, although most of the improvement is expected in its U.S. operations.
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