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More drilling expected as oilpatch recovers from downturn

Industry group predicts 31 per cent increase over preliminary drilling forecast
An oil and gas rig seen from a plane east of Dawson Creek. Two industry groups say activity levels are improving after an extended downturn.

Things are looking up for B.C.’s battered oilpatch.  

More than two years into one of the most severe downturns in a generation, two industry groups say drilling and other activity levels are climbing thanks to improved oil and gas prices. 

On Jan. 30, the Petroleum Services Association of Canada (PSAC) released its revised 2017 outlook, calling for a 23 per cent increase in the number of wells expected to be drilled in Canada this year.  

The group forecasts Canadian producers will drill 5,150 wells in 2017, up 975 from a preliminary forecast released in November.

PSAC expects 367 of those wells will be in B.C., a 31 per cent increase over the preliminary forecast of 280. 

Mark Salkeld, the association’s president and CEO, said oil prices are increasing thanks to stabilizing OPEC production levels.

The cartel opted to keep production levels high over the past two years to drive out higher cost North American producers, which have gobbled up market share since the advent of improved hydraulic fracturing technologies. 

“The geopolitics settled down,” he said. “The global supply and demand was the biggest factor. Saudi Arabia and OPEC got it under control to a certain degree, or at least enough to encourage investor confidence, which puts money back into the industry which improves the drilling forecast.” 



Natural gas producers in B.C. are seeing a similar bump. While prices have not improved to the same degree as oil, several producers in the region are able to make money at $3 natural gas, Salkeld said.  

Energy Services B.C. Executive Director Art Jarvis is also seeing improvement. 

“2016 was the worst of the downturn, and we’re on our way out of it,” he said. “There’s lots of activity on the highways, and in the outlying areas where they’re doing gas drilling facility manufacture. The followthrough that happens after drilling is very active right now.”

Forty-five per cent of B.C.’s fleet of 71 rigs was drilling the week of Jan. 23, according to the Canadian Association of Oilwell Drilling Contractors. B.C.’s rig utilization rates haven’t topped 45 per cent in a single month since March 2015. 

While that’s an improvement, Salkeld said the industry is still a long way off from pre-downturn employment and investment levels. 

“We’re waiting on the LNG decisions,” he said. “Those are the ones that are going to really make a difference for B.C. on the gas side of things.” 

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