Things could be looking up for the oil and gas industry in 2021, according to the Petroleum Services Association of Canada’s 2021 Canadian Oilfield Services Activity Forecast.
In its first update of the year to the forecast on Jan. 28, PSAC revised its predicted number of wells to be drilled in Canada this year to 3,350.
This is 12% more than the number of wells that were drilled in 2,992, which is a trend in the right direction, but only a modest increase overall.
However, compared to the original 2021 forecast made in October 2020, the new prediction is 29 % greater, and calls for 750 more wells to be drilled. In just three months, the PSAC went from thinking activity would be trending downward, to predicting a slow climb back towards respectability.
“Timing is everything — when we made our initial forecast, we didn’t have any vaccines rolling out in the country,” said PSAC Interim President Elizabeth Aquin.
“Now, vaccines are starting to roll out, commodity prices have recovered, and oil and gas companies have announced an additional $3.36 billion in vestments for this year in addition to the $27.3 billion already announced.”
This is undoubtedly good news for the industry.
As the vaccine rollout in Canada has been less than ideal compared to that of other countries, one could assume an improvement in the amount of vaccines delivered to people could bode even better things for the industry as the year goes along.
As for B.C., Aquin said the forecast is calling for a 10% increase in the number of wells to be drilled this year (420, compared to 367 in 2020).
“The Montney Formation has been very economic at the gas prices we’re seeing right now, and that bodes well for activity in Northern B.C.,” Aquin said.
The 367 wells drilled in B.C. in 2020 was comparable to recent years, but if the 2021 prediction is accurate, B.C. could see more than 400 wells drilled in a year for the first time in a while.
However, there’s a long way to go to get to the high mark of 614 wells drilled in a year.
Another sign that things could be headed in the right direction is the fact that 64% of the wells drilled in B.C. in 2020 came in the first half of the year, meaning that companies had plans to make a big push in the amount of activity last year and were on track to do that before COVID-19. That only 36% of the 367 wells were drilled in the second half of 2020 shows just how much of a negative impact the pandemic really had on the industry in northern B.C.
This year, 47% of the predicted number of wells drilled in B.C. for 2021 will be drilled in the first six months, meaning the worst of the pandemic as it applies to the oil and gas industry could be behind us.
“If people start getting back to work, if the economy starts recovering, and with vaccines rolling out, that will no doubt raise prices. With LNG Canada proceeding, and natural prices looking good, these are positive signs for northern B.C.,” said Aquin.
Email reporter Dillon Giancola at firstname.lastname@example.org.