Soft gas prices have caused drilling activity in Canada to fall off from previous highs this decade, but thousands of new wells will still be drilled this winter. The activity will be focused in the Western Canadian Sedimentary Basin (WCSB), covering 580,000 sq miles (1.5 million sq km) and underlying four Canadian provinces (British Columbia, Alberta, Saskatchewan, Manitoba) and the Northwest and Yukon Territories. But the rig fleet may shrink, and drilling activity is expected to remain flat in 2010.

CAODC forecast

The Canadian Association of Oilwell Drilling Contractors (CAODC) released its 2010 forecast for western Canada Oct. 20, saying 8,523 wells would be drilled. CAODC expects the size of the western Canadian rig fleet to drop to about 800 available drilling rigs, down from an average of 854 in 2009.

The forecast is based on natural gas priced at US $5.25/ Mcf AECO hub, crude oil priced at $70/bbl (WTI), and 9.3 days/well, spud to release. CAODC expects an average rig utilization rate of 27% through 2010, up slightly from 24% in 2009 but still down significantly from 40% utilization in 2008 and 38% in 2007.

The busiest period is expected to be 1Q 2010, with about 320 rigs working 28,000 operating days (40% utilization). With the spring thaw, 2Q 2010 activity will drop to 96 rigs and 12% utilization (8,640 operating days), CAODC says. Summer drilling in 3Q 2010 will engage 200 rigs at 25% fleet utilization, working 18,000 operating days. Drilling activity will pick up again in 4Q 2010, with 256 rigs drilling for 23,040 operating days at 32% fleet utilization.

CAODC reviews its forecasts three times each year, in February, July, and October.

PSAC forecast

On Nov. 5, the Petroleum Services Association of Canada forecast another year of low oilpatch activity for 2010. PSAC estimates that only 8,000 wells will be drilled across Canada in 2010, the same number it expects to be drilled this year. A year ago, PSAC and others estimated that about 16,000 wells would be drilled in 2009, but activity slowed substantially through the year as the recession dug in, said Roger Soucy, PSAC president. Now PSAC forecasts conventional shallow gas drilling activity in southeast Alberta will be down about 30%.

PSAC based its forecast on average natural gas priced at $5.25/Mcf AECO hub — 10% lower than CAODC’s assumption — and crude oil priced at US $72/bbl (WTI). The majority of the wells will be drilled in Alberta (5,095, down 5% from 2009); Saskatchewan (1,935, up 10%); British Columbia (630, up 7%); and Manitoba (300 wells, up 22%). PSAC expects only 40 wells to be drilled in the other provinces and territories in 2010.

Maritime provinces

Based on operator presentations at the NOIA conference in St. John’s, Newfoundland, in June 2009 and the CORE conference in Halifax, Nova Scotia, in October, land drilling will continue in the Maritime Provinces.

Nabors Canada operates 86 drilling rigs, predominantly in the WCSB, but it has had two rigs in the Maritimes for a few years. Rig 4, a double, arrived in 2006, and Rig 58, a triple, arrived in 2007. Both are working in New Brunswick.

Calgary-based Stoneham Drilling Trust, a contract driller based in Calgary, mobilized a rig to eastern Canada in the first part of 2009; it is now operating in the Bay St. George Basin of western Newfoundland.

At the end of November, there were four floating rigs — one jackup, two semisubs, and one drillship — working in or en route to Atlantic Canada in addition to the two platform rigs operated by Noble Drilling at Hibernia.

Operator plans

In mid-November, Devon Energy Corp. announced that it would focus on US and Canadian land drilling and divest its interests in the Gulf of Mexico, Brazil, Azerbaijan, Russia, and China. Devon expects to recover $4.5 to $7.5 billion in the divestiture. According to Dave Hager, executive vice president for E&P, Devon has 1,400 risked, undrilled locations in the Horn River Basin, 420 in the Jackfish SAGD area, and 8,130 others in its Canadian acreage. The company will spend $5.2 to $5.9 billion on E&P projects in 2010 and will drill 12 wells in the Horn River.

Canadian Natural Resources Ltd. announced a 2010 budget of $3.75 billion, up 26% from 2009, despite lower profits. More than 80% of the capital will be spent on crude oil projects, including heavy oil development and light oil enhanced recovery projects in Canada and abroad, said Steve Laut, company president and COO. The company will spend more than $2.48 billion of the 2010 budget on conventional oil and natural gas development in Canada, including drilling 13 wells in the Septimus/Montney natural gas play in British Columbia.